The American Rescue Plan Act (ARPA) was signed into law on March 11, 2021 and has notable implications for the Employee Retention Credit (ERC). Here are the fundamental changes and updates to the ERC as a result of the ARPA:
Expanded Eligibility Criteria
Under the CARES Act, companies were eligible for the ERC if they experienced a substantial decline in gross receipts or were fully or partially suspended due to government orders related to COVID-19. However, the ARPA expands eligibility by allowing companies that started in 2020 to qualify for the ERC, regardless of whether they experienced a decline in gross receipts or were partially or fully suspended. This is excellent news for new businesses previously ineligible for the credit.
Increased Credit Amount
The ARPA increases the maximum credit amount from $5,000 to $7,000 per employee per quarter for the first two quarters of 2021. This means eligible businesses can now claim a maximum credit of $14,000 per employee for the first two quarters of 2021. This increase in credit amount is intended to provide more support to struggling businesses during the ongoing pandemic.
Interaction with PPP
Businesses that received Paycheck Protection Program (PPP) loans were previously ineligible for the ERC. However, the ARPA changes this by allowing companies receiving PPP loans to claim the ERC. In addition, this change applies retroactively to the beginning of 2020, so businesses that previously received PPP loans may now be eligible to claim the ERC for 2020.
Extension of Credit Period
The ERC was initially set to expire at the end of 2020. However, the Consolidated Appropriations Act (CAA) extended the credit period through June 30, 2021. The ARPA further extends the credit period through December 31, 2021. This means eligible companies can now claim the ERC for all four quarters of 2021, providing more relief to struggling businesses.
Take Advantage of the Changes
The changes and updates to the ERC under the ARPA are significant. They can provide much-needed relief to struggling businesses during the ongoing pandemic. If you think your company may be eligible for the ERC, you must act quickly to take advantage of the changes and maximize your credit.
Contact an ERC Expert
Get in touch with GetMyBizRefund today to learn how the updates may impact your business. Our support team is always available to assist you with any questions or concerns. We are here to handle the hard work, so you don’t have to worry about anything. Our team of professionals is committed to ensuring that your business receives the maximum ERC credit it is eligible for. Therefore, do not hesitate to contact us to learn more about ERC credits and how we can provide expert assistance.