Update Employee Retention Credit - August 2022

Rödl & Partner Tax Matters Volume 2022-3, published August 3, 2022

As discussed in Rödl Tax Matters Volume 2021-2, the Employee Retention Credit was significantly expanded and extended through 2021 under the Consolidated Appropriations Act (CAA) and the American Rescue Plan Act of 2021. Currently it runs through Q3 2021 due to the Infrastructure Bill removing Q4. As also mentioned, the credit is available for certain employers subject to either a full or partial suspension of their business due to a government order, or if during a calendar quarter the employer experienced a decline in gross receipts, 50% quarter by quarter decline in 2020 and 20% in 2021. While many employers have focused on whether they had a great enough decline in gross revenue, we want to bring to your attention the other eligibility test which is a full or partial suspension of their business due to a government order. An employer may qualify under the government orders test even if their revenue did not decline.

Whether an employer qualifies under the full or partial suspension due to a government order provision is based on each employer's facts and circumstances, but there may be a much broader application than it first appears. Consideration should be given to things like whether there were reduced hours of operation or capacity limitations, restrictions on travel, or impact on operations due to OSHA, CDC or other government mandates. If you believe your operations were impacted in some manner, please reach out to your Rödl & Partner representative to discuss further. We have an excellent nationwide partner we work with who can assist in the analysis. Remember that the credit is an above the line refundable payroll tax credit, treated as cash and can be significant.

If you have any questions, please contact your local Rödl & Partner representative.

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