Marc Pestronk

Q: I heard that it is still possible to get money from the federal government for losses incurred by our agency during the pandemic. Is this money in addition to Paycheck Protection Program payments? If so, how much can I get and how can I get it?

A: The federal program that is still in effect is called the Employee Retention Credit (ERC). It’s a misnamed program because the amount you can get isn’t tied to the taxes you’ve paid.

To be eligible, companies must show at least a 50% drop in revenue in 2020 compared to 2019 or at least a 20% drop in 2021 compared to 2019, or they must operate under significant government restrictions, which which certainly includes almost all travel. Company.

The ERC is a credit that primarily compensates for social charges. Then, the unused portion for the credit is refundable to the employer. Employers can receive a benefit of up to 50% of the first $10,000 of salary per employee for 2020 and up to 70% of the first $10,000 of salary per quarter for the first three quarters of 2021, for a total of up to reach $26,000 per employee. that you kept throughout 2020 and 2021.

Here are the catches: first, it’s not available to business owners themselves; nor is it available to your independent contractors. Second, you must exclude the salary that was used to calculate the proceeds of your PPP loans that were forgiven.

Each of the two PPP loans was good for a maximum of two and a half months’ salary, so if you received both PPP loans and they were cancelled, you can only count the part of the compensation that exceeded five months of salary.

It’s not too late to claim the ERC, as you still have a year to do so. You must file a Form 941-X, which allows you to amend your previously submitted Form 941, which is the employer withholding tax return. You need one such form for each of the four quarters of 2020 and the first three quarters of 2021.

Then you need to complete Form 7200 to get the refund. If you have more than 100 employees, you are subject to reimbursement restrictions, and if you have more than 500, you cannot obtain reimbursement.

You will probably need help from your accountant to file, as the program is more complicated than the PPP was. I’ve read that some accountants tell their clients that you can’t claim an ERC if you’ve already taken out a PPP loan and had it forgiven, but that’s not true.

After you file a refund request, you have to wait because the IRS takes a long time to send out refunds. As of June, it takes an average of nine months, but the process will likely slow down over the coming year as more employers realize they can get the money.


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