IR-2020-62 (March 31, 2020): Employee Retention Credit

The Treasury and the Internal Revenue Service announced that the Employee Retention Credit is now available for businesses financially impacted by coronavirus and trying to keep employees on their payroll. The refundable tax credit is worth 50% of up to $10,000 in wages paid by an eligible employer whose business has been financially impacted.

Does my business qualify to receive the Employee Retention Credit?

The credit is available to all employers regardless of size, except for state and local governments and small businesses who already take small business loans. Questions include:

Qualifying employers must fall into one of two categories:

  • The employer's business is fully or partially suspended by government order

  • The employer's gross receipts are below 50% of the comparable quarter in 2019

How do I know which wages qualify?

Qualifying wages are based on the average number of a business's employees in 2019. For employers with less than 100 employees, the credit is based on wages paid to all employees, whether they worked or not. For employers with more than 100 employees then the credit is allowed only for wages paid to employees who did not work during the calendar quarter.

I am an eligible employer. How do I receive my credit?

Employers can be immediately reimbursed for the credit by reducing their required deposits of payroll taxes that have been withheld from employees' wages by the amount of the credit.