Companies that received Paycheck Protection Program (“PPP”) funding last year could obtain additional savings via the Employee Retention Credit (“ERC”) requirements.

Opportunities exist both to retroactively claim payroll tax refunds in 2020 and to realize further savings prospectively in 2021. For 2021 opportunities, companies can further accelerate the receipt of savings by filing a Form 7200 with the IRS to request a refund advance payment. The ERC could provide a cash recovery of up to $5,000 per employee for 2020 and $14,000 for 2021. Companies should assess qualifications for a 2021 ERC in conjunction with the second draw PPP (“PPP2”) loan program, as careful planning and coordination are necessary to maximize the benefits of both programs.

To learn more, download the Key Requirements and Concepts for the ERC Credit.

Reference Links:

• "The Employee Retention Credit: New IRS FAQs Address Questions on this Potential Liquidity Source", April 30, 2020
• "IRS FAQs Provide Helpful Employee Retention Credit Guidance, But Many Questions Remain", June 24, 2020
• A&M Taxand's Research Credit & Incentives Practice