IRS Launches Employee Retention Credit During COVID-19 Pandemic
On March 31, 2020, the U.S. Treasury Department and Internal Revenue Service (IRS) announced the debut of the Employee Retention Credit to encourage organizations to keep employees on the payroll during the novel coronavirus pandemic.
The Employee Retention Credit is a refundable tax credit of 50 percent of up to $10,000 in wages paid by eligible employers negatively affected by COVID-19 related financial problems. Wages paid after March 12, 2020 and before January 1, 2021 are qualifying wages eligible for the Employee Retention Credit.
Qualifying wages are calculated based on the average number of employees at the organization in 2019. If the employer had 100 or fewer employees in 2019 on average: the credit is based on wages paid to allemployees "regardless if they worked or not." Employers of all sizes may be eligible.
Eligible employers must report the total amount of qualified wages for each quarter on quarterly employment tax returns (IRS Form 941) beginning on the second quarter. Advance payments may be available from the IRS by submitting Form 7200, available on the IRS website.
For more details or information go to: https://www.irs.gov/newsroom/covid-19-related-tax-credits-for-required-paid-leave-provided-by-small-and-midsize-businesses-faqs
Or contact your accountant or CPA.