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Democrat and Republican leaders have reached a $900 billion coronavirus relief deal that includes significant components for business. The Committee on Ways and Means has published an Overview of Achievements, which include:

  • 5-year extension of Empowerment Zones (Fed EZ) and Work Opportunity Tax Credit (WOTC)
  • 2-year extension of Indian Employment Credit (IEC)
  • 1-year (plus sixty days) extension and expansion of Disaster Relief
  • 6-month extension and expansion of the Employee Retention Tax Credit

Highlights of Employee Retention Tax Credit modifications

The provision extends and expands the CARES Act employee retention tax credit (ERTC). It also contains technical corrections to the CARES Act.

Beginning on January 1, 2021 and through June 30, 2021, the provision:

  • Increases the credit rate from 50 percent to 70 percent of qualified wages;
  • Expands eligibility for the credit by reducing the required year-over-year gross receipts decline from 50 percent to 20 percent and provides a safe harbor allowing employers to use prior quarter gross receipts to determine eligibility;
  • Increases the limit on per-employee creditable wages from $10,000 for the year to $10,000 for each quarter;
  • Increases the 100-employee delineation for determining the relevant qualified wage base to employers with 500 or fewer employees;
  • Allows certain public instrumentalities to claim the credit; and
  • Provides rules to allow new employers who were not in existence for all or part of 2019 to be able to claim the credit.

Retroactive to the effective date included in section 2301 of the CARES Act, the provision:

  • Provides that employers who receive Paycheck Protection Program (PPP) loans may still qualify for the ERTC with respect to wages that are not paid for with forgiven PPP proceeds;
  • Clarifies the determination of gross receipts for certain tax-exempt organizations; and
  • Clarifies that group health plan expenses can be considered qualified wages even when no other wages are paid to the employee, consistent with IRS guidance.

We anticipate Congress will pass and the President will sign the legislation by midnight tonight. We will follow up with additional details as soon as they become available.

Synergi Partners is prepared to assist you in claiming these much needed and valuable credits. If you have any questions, please do not hesitate to reach out us at 843-519-0808.

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For your reference is The Committee on Ways and Means Overview of Achievements.