As we all know about COVID-19, a virus that is spread mostly all over the world, is causing severe loss of both; lives and finance. None can bring back the gone lives but to help against the financial crisis, many countries are helping their citizens by providing aids and grants. Similarly, many businessmen are using the facility of tax relief companies like Tax Credit Co to save their capital.
Other than seeking help from tax relief companies like Tax Credit Co, people are also expecting help from their government. For that, governments are announcing the most suitable and effective policies, relief packages, and aids. One example of such financial aid is the Employee Retention Credit of the USA.
If you are new to this term or have recently heard about its news, you ought to give this article a read. So that you will be able to get what an employee retention card is.
What Is It?
This is an aid due to coronavirus, providing relief to the local business community through the CARES Act. This act contains a business relief provision, which we called as Employee Retention Credit also known as erc credit. In very general words, it is financial compensation for qualified wages and employees. It applies to the employees working between 13 March and 31 March 2020.
Why Do We Need?
The reason for this provision is to motivate employers to keep them on the payroll, even if people are not working during this pandemic period which is affected by the coronavirus outbreak.
How Can You Qualify As An Eligible Employee?
In order to receive the credit, you must carry on a trade or business in 2020 and must fulfill this criterion:
- If this pandemic has either fully or partially suspended your business operations in any quarter of 2020 and you have been following government orders
- Or if you have experienced any significant decline in gross receipts due to the pandemic. Also, the gross receipt you have got is either half or less than half of what you made in the same period of 2019
For example, if you are the owner of a restaurant that has closed service of dine-in customers, but still allowing drive-thru, or delivery operation. Then you can qualify for the credit, which is based on a coronavirus-related partial shutdown.
Also, those employers, which own tax-exempt organizations are eligible for the credit.
Is There Any Impact Of Other Credit And Relief Provisions?
What do you think? Does it have any impact? Actually yes!
An eligible employer’s ability claims other credit and relief provisions that impact the Employee Retention Credit are as follows:
- Let suppose if an employer receives any small business interruption loan covered by the Paycheck Protection Program, additionally authorized beneath the CARES Act. Such an employer is not eligible for the Employee Retention Credit
- The Wages for this credit is not including wages for which the employer accepted a tax credit for paid sick and family leave following the “Families First Coronavirus Response Act”
- Wages calculated for this credit can’t be estimated for the credit for paid family. Along with it, those who are on medical leave under the section 45S of the “Internal Revenue Code” will not be able to get the credit
The situation is really very bad all around the world. All the underdeveloped countries, developing countries, developed countries as well as the superpower of this century are facing a lot of troubles during this lockdown. Experts suggest that it might take more than ten years in the complete recovery of the world economy.
However, countries are trying their best to recover the loss and to prevent any further loss. Also, to provide leverage to citizens, states are giving aids. It includes those who are following the SOPs and are fulfilling the state’s orders. For such entities and people, governments of respective states and countries are giving them financial aids and loans.
People who are facing problems in earning their meals need the support of aids and grants. So that they could survive in this situation. Therefore, the US government has announced the Employee Retention Credit. Thus it has come with the vision to provide an equal growth opportunity to everyone.
Interesting related article: “What is an Economic Crisis?“