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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.

New and Significant Opportunities! Employee Retention Credit

Inquiries about the employee retention credit (ERC) have definitely increased over the last two weeks after significant changes under the recent stimulus bill. This refundable credit now provides up to $7,000 per employee per quarter for eligible employers. 

Some of these changes applied retroactively, such as the inclusion of PPP Recipients in claiming the credit (however no double dipping on wages paid by the PPP).

Other changes such as the higher 70% rate, annual limit, small business criteria (100 vs. 500 employees) and lower gross receipts reduction may not apply retroactively. Hopefully additional guidance from the IRS will be forthcoming.

2020 credit: 50% of qualified wages (up to $10K a year per employee) for an eligible employer.

2021 credit: 70% of qualified wages (up to $10K a quarter per employee) for an eligible employer.

Under the new rules, eligible employers, including tax-exempt organizations, may claim the ERC through their 941 employment tax filings if the business experienced: 

  • 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,

OR

  • A 20% decline in gross receipts on a year over year quarterly basis.

As many states have been under a governmental order to limit commerce and travel due to COVID-19, this tax credit applies to many organizations.

PPP Loan Recipients: PPP recipients can now claim the credit, but wages covered by a PPP Loan are excluded.

                       EXCLUSIONS FOR WAGES USED TO CLAIM OTHER CREDITS  (no double dipping)

  • Family First Coronavirus Response Act

  • Paid Family and Medical Leave

  • Work Opportunity

  • Research and Development

  • Empowerment Zone

  • Renewable Energy Production

                                                                WE CAN HELP MAXIMIZE YOUR CREDIT!

If you’re a busy executive in a mid-size company and want to talk, please call Matt at (801) 602-2679 or complete the contact information below.

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Meet Shawn Marchant & Matt NeueNswander

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.

Matt Neuenswander

R&D Manager

Matt has over seven years of experience in public accounting. He started his career with Ernst & Young providing tax services to technology, pharmaceuticals, biotech, aerospace, and real estate companies. His experience 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 degrees in accounting at Brigham Young University. He is licensed as a CPA in the state of Utah and is a member of the American Institute of Certified Public Accountants and the Utah Association of Certified Public Accountants. 

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