The Employee Retention Tax Credit (ERTC) is a tax credit designed to encourage eligible employers to keep their employees on payroll during the COVID-19 pandemic. To qualify for the ERTC, employers must meet certain criteria, including:
Experiencing a partial or full suspension of business operations due to government orders related to COVID-19, or
Experiencing a significant decline in gross receipts, defined as a 50% or more decline in gross receipts in a quarter compared to the same quarter in the previous year.
In addition to meeting one of these two criteria, eligible employers must also meet other requirements, such as:
Having an average of 500 or fewer full-time employees during 2019, or
Having an average of more than 500 full-time employees during 2019, but experiencing a significant decline in gross receipts.
There are other eligibility requirements and specific rules for claiming the credit, so it's important for employers to consult with their tax professionals to determine if they qualify for the ERTC.