EMPLOYEE RETENTION CREDIT
The Employee Retention Credit (“ERC”), part of the 2020 CARES Act, encourages businesses and organizations to retain employees during the economic downturn resulting from the COVID-19 pandemic.
This refundable tax credit can total up to $5,000 per employee and can be applied against certain employment taxes. The credit is based on qualified wages paid between March 13, 2020 and December 31, 2020.
Employers regardless of size, including 501(c) tax-exempt organizations are eligible to claim the ERC provided their trade or business experience either:
Full or partial suspension of the operation of their trade or business during any calendar quarter because of a governmental order limiting commerce, travel, or group meetings due to COVID-19,
A significant decline in gross receipts.
As many states have been under a governmental order to limit commerce and travel due to COVID-19, this tax credit likely applies to many organizations. However, some businesses are not eligible for the ERC. Exceptions to the credit include:
Any business that receives a Small Business Interruption Loan under the Paycheck Protection Program (PPP Loan)
Any business or organization that is considered an agency or instrumentality of a state or local government
Wages for which the employer received a tax credit for paid sick and family leave under the Families First Coronavirus Response Act
Wages counted towards the credit for paid family and medical leave under section 45S of the Internal Revenue Code
Wages counted toward the Work Opportunity Tax Credit (WOTC) under section 51 of the Internal Revenue Code
A business may claim an ERC and a Research Credit under section 41 of the Internal Revenue Code for the same wages.
Meet Shawn Marchant, Tax Principal
For over 20 years Shawn has been advising clients regarding federal and state tax credits and incentives, primarily in the areas of research credits, domestic production activities deduction, and meals and entertainment expenses. His experience ranges from initial scoping through project implementation and delivery, project management, IRS and state audit support, and evaluation of benefits for financial statement presentation. Shawn spent 16 years in the “Big 4,” most recently with Ernst & Young. Shawn began his career in Deloitte’s National R&D Tax Credit group and spent two years in their Accounting Methods & Periods National Practice Group in Washington, DC. A frequent speaker on these topics, Shawn is an attorney licensed in California. He received a JD from BYU J. Reuben Clark Law School and an LLM in Tax from Georgetown University Law School.
Meet Matt Neueswander, R&D Manager
Matt has over seven years of experience in public accounting. He started his career with Ernst & Young (EY) providing tax services to technology, pharmaceuticals, biotech, aerospace, and real estate companies. His experience at EY includes R&D and Orphan Drug tax credits, accounting methods, cost segregation, tax compliance, and ASC 740 audits. Prior to joining Tanner, Matt spent two years at CGI, a global IT consulting firm, where he managed U.S. tax credits and incentives programs including R&D tax credits, Federal and State audits, job credits, state development grants, domestic manufacturing deduction, and fringe benefit analysis. Matt received his bachelor’s and master’s in accounting at Brigham Young University. He is licensed as a CPA in the state of Utah and a member of the American Institute of Certified Public Accountants and the Utah Association of Certified Public Accountants.