Make Sure You Are Processing any CARES Act Payments

Date: February 9, 2021

Make sure you are processing any CARES act payments that you may be entitled to.  The PPP loans are applied for at your bank and the ERC is applied for thorough current or amended 941X’s.

The upcoming deadlines are:

1)Payroll Protection Program – round 2 (PPP2)- application due by 3/31/2021 or when monies run out

2)Payroll Protection Program – round 1 (PPP1)- if not file already due by 3/31/2021 or when monies run out

3)Employer retention credits- now available for wages paid in 2020 not covered by PPP1 or 2 loans.  – 941X forms will need to be filed, filing the sooner the better

4)PPP1 forgiveness applications are due 10 months after the end of the covered period.  (April-June 2021)

The new PPP2 fund rules are:

Eligibility:

• <300 employees (hospitality exception)
• Have used (or will use) the full amount of PPP1 on eligible expenses
• In operations 2/15/2020
• Revenue deduction of 25% in any quarter 2020 compared to same quarter 2019 (or annual 2020 to 2019)
  

Computation

• Payroll costs are computed using either 2019 or 2020 wages, whichever is higher
• Use monthly average payroll costs (gross wages +retirement + health costs)/12 months x 2.5 (3.5 for hospitality)
• Self-employed sole practitioner, 2% shareholder/partner/owner is based on 2019 or 2020 net income
• Exclude excess payroll over $100K

Employer Retention Credit rules are:

Eligibility for 2020 wages:

• Fully or partially suspended or reduced business hours due to government order.  Or that quarters gross receipts 50% below same quarter in 2019(not including PPP)

Computation

• 50% of wages up to $10,000 ($5,000 credit), per employee annually
• Wages after March 13 not covered by PPP loans are eligible

Eligibility for 2021 wages:

• Fully or partially suspended or reduced business hours due to government order.  Or that quarters gross receipts 20% below same quarter in 2019 (not including PPP)

COMPUTATION

• 70% of wages up to $10,000 ($7000 credit) quarterly
• Wages between Jan1 -June 30, 2021 not covered by PPP loans are eligible