February 19, 2021 by Michael Anzalone
Does your Food & Beverage business quality for Employee Retention Credit for 2020 and/or 2021?
OSC Partner Guest Blog
Featuring Larisa Rapoport, CPA, MBA, CGMA, Partner @ Baker Tilly | Advisory, Tax and Assurance
The latest round of economic relief passed through Congress in late 2020 extends and expands the employee retention credit (ERC). This presents a significant opportunity for food producers. If qualified, a business can receive up to $19,000 per employee in refundable payroll tax credit over the course of 15 months (for 2020 and 2021 combined). Following are considerations in determining whether and how your business may benefit from the Employee Retention Tax Credit. There are nuances to each of these items.
When combining all related entities, did your business experience a:
- Partial or full suspension of operations as a result of a COVID-19 government order? Examples include:
- Reduced production from compliance with social distancing (e.g. 6 feet apart) mandates, and
- Supply constraints caused by government closures of key vendors.
- Significant decline (more than 50% in 2020 and 20% in 2021) in gross receipts compared to the same quarter in 2019 (or prior quarter for quarters in 2021)?
Type of Credit
It’s refundable, so businesses benefit even when taxes are not owed. It reduces payroll taxes, so having an income tax liability is not required.
Amount of Credit
- 2020: Up to $5,000 per employee, calculated as 50% of annual qualified wages, and
- 2021: Up to $14,000 per employee ($7,000 per quarter for the first half of 2021), calculated as 70% of qualified wages.
- W-2 wages and tips and certain health care expenses paid after March 12, 2020.
- Excludes: Wages covered by paid leave or work opportunity tax credits, and amounts paid with forgiven PPPL funds.
- If the average number of full time employees among the combined related entities exceeded 100 in 2019 (500 for 2021 wages), wages are limited to amounts paid to employees unable to work due to the circumstances described under “Eligibility”.
For more info, contact Larisa Rapoport firstname.lastname@example.org to discuss further.