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IRS Employee Retention Credit

Posted by: Zaher Fallahi
Posted On: May 01, 2020

IRS Employee Retention Credit

The U.S. Treasury Department and the Internal Revenue Service have launched the Employee Retention Credit, designed to encourage businesses to keep employees on their payroll. The refundable tax credit is 50% of up to $10,000 in wages paid by an eligible employer to each employee between March 13, 2020 and December 31, 2020, and is available to all employers regardless of size, including tax-exempt organizations. Qualifying employers must fall into one of two categories:

(a)   The employer’s business is fully or partially suspended by government order due to COVID-19 during the calendar quarter, or

(b)   The employer’s gross receipts are below 50% of the comparable quarter in 2019. Once the employer’s gross receipts go above 80% of a comparable quarter in 2019, they no longer qualify after the end of that quarter. These measures are calculated each calendar quarter. IRS Employee Retention Credit .

Comment: This credit is a great relief, but requires extreme hardship and not many businesses may be eligible for it.