Employee Retention Credit (ERC) 

Eligible U.S. Employers can receive up to $26,000 per employee

1.WHAT IS THE EMPLOYEE RETENTION CREDIT?

 

The federal government has established the Employee Retention Tax Credit (ERC), which provides a refundable employment tax credit of up to $26,000 per employee to help companies bear the cost of retaining employees during the Covid-19 pandemic. Companies can use ERC to offset federal payroll taxes (Employment Payroll Tax) on qualified wages paid to employees from March 13, 2020 to September 31, 2021. Companies can still apply for ERC subsidies. In 2020, the ERC provides credits of up to $5,000 per employee. In 2021, the ERC provides credits of up to $21,000 per employee.

 

2. WHICH COMPANIES ARE ELIGIBLE TO APPLY?

 

Enterprises with no more than 500 employees

 

The business was established and started operations before February 15, 2020 (see item 5 below)

 

Revenue in any quarter of 2020 drops by more than 50% compared to the same quarter in 2019

 

Revenue in any quarter of 2021 drops by more than 20% compared to the same quarter in 2019

 

Businesses are temporarily operating partially or fully due to government shutdown orders related to the epidemic.

 

3. WHAT ARE SOME OR ALL OPERATIONS TEMPORARILY SUSPENDED DUE TO GOVERNMENT SHUTDOWN ORDERS?

 

All businesses are closed due to government epidemic prevention requirements.

 

Because the government’s epidemic prevention requirements limit the maximum capacity of the operating site (Capacity Limited) or the operating hours are reduced (Operating Hours Reduction). For example, because the government’s epidemic prevention requirements take time to disinfect and clean, resulting in a reduction in effective operating hours)

 

The company maintains normal operations, but the supply chain (Supply Chain) has been suspended due to government epidemic prevention orders, resulting in normal production being unable to occur or business being affected.

 

4. WHAT IS THE APPLICATION AMOUNT?

 

For 2020, the ERC provides a credit of up to $5,00 per employee. Employers can receive a credit equal to 50% of the first $10,000 of total qualified wages paid to each employee in all qualified quarters.

 

For 2021, the ERC provides a credit of up to $2,1000 per employee. Eligible employers can receive 70% of the first $10,000 of qualified wages paid per employee in each qualifying quarter. The maximum amount of ERC subsidy per quarter is US$7,000 per employee receiving qualifying wages (except for the fourth quarter, which has company establishment time requirements)

 

Please note that eligible employees cannot include the boss or their family members.

 

5. APPLICATION QUALIFICATIONS FOR COMPANIES THAT START OPERATIONS AFTER FEBRUARY 15, 2020

 

If your business is a new company (Recovery Startup Business) that started operations after February 15, 2020, it is also eligible to apply for ERC as long as the annual revenue does not exceed $1,000,000 (1 million USD). New companies do not need to meet the 20% decline in turnover requirement, but can only apply for the ERC in the third and fourth quarters of 2021, and the maximum credit amount cannot exceed $50,000 per quarter.