As the COVID-19 pandemic has continued into 2021, the COVID-19 Relief that was signed on December 27, 2020 has changed the Employee Retention Credit, expanding it and making it more available to small employers.
The ERC is available if an employer has either: 1) a full or partial suspension of their operations because of governmental orders limiting commerce, travel or group meetings due to COVID-19, or 2) a decline in gross receipts in a calendar quarter in 2021 where the gross receipts of that calendar quarter are less than 80% of the gross receipts in the same calendar quarter in 2019, or for qualification in 2020, gross receipts less than 50% of the comparable 2019 quarter.
Retroactive to the March 27, 2020 enactment of the CARES Act, the law now allows employers who received Paycheck Protection Program (PPP) loans to claim the ERC for qualified wages that are not treated as payroll costs in obtaining forgiveness of the PPP loan.
The refundable credit is claimed on IRS Form 941, and includes wages reported on line 5c of the form. This means that clergy salaries and housing allowances are not eligible for this credit.