Small Businesses Seeking Additional Relief Should Look to Employee Retention Credit

Small businesses impacted by COVID-19 and seeking additional relief may find the help they need from the IRS Employee Retention Credit (ERC).

The Taxpayer Certainty and Disaster Tax Relief Act of 2020, enacted December 27, 2020, made several changes to the employee retention tax credits previously made available under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), including modifying and extending the Employee Retention Credit (ERC). Several of the changes apply only to 2021, while others apply to both 2020 and 2021.

Since this is an IRS program, small businesses should consult their tax advisor for ERC guidance.

Tips for claiming the ERC

• Review IRS Employee Retention Credit information and determine as soon as possible if your business meets the eligibility criteria.
• Locate all payroll information for the last few years.
• Assemble the required documentation; if your business is eligible to receive the credit, you’ll be ready to submit the necessary information to the IRS.

The program is set to expire at the end of 2021 so there’s still time for eligible businesses to pursue the credit if you haven’t done so already.

Resources:

• IRS Employee Retention Credit webpage
• IRS news release - New law extends COVID tax credit for employers who keep workers on payroll
• S. Department of the Treasury, Small Business Tax Credit Programs including Employee Retention Credit 

This communication is intended for general informational purposes only and does not constitute legal, tax, accounting or other advice. We recommend you consult your legal, tax, accounting or other advisor and review the law and regulation for complete understanding and application to your specific situation. Central Pacific Bank will not be responsible or liable for any reliance on this communication.