Good news! The new COVID relief bill allows for businesses who received Paycheck Protection Program (PPP) loans to now claim the Employee Retention Tax Credit.
In the CARES Act passed earlier this year, businesses could either receive a PPP loan or claim the Employee Retention Credit (ERC), but they were not eligible for both. As a result of new legislation signed into law this week, Section 206(c) allows businesses that received a PPP loan to go back and claim the Employee Retention Tax Credit for 2020. The Treasury Secretary along with the Small Business Administration and IRS will be providing additional guidance on how to retroactively claim the tax credit, but for now we know the payroll costs paid during the covered period of the PPP loan and forgiven shall not be treated as qualified wages for the ERC. This clause is to prevent businesses from double dipping on the same payroll costs. Section 206(c) does not include details regarding how businesses who already applied for PPP loan forgiveness can make these elections nor how to allocate wages during the covered period between the PPP loan forgiveness and ERC.
As we receive additional guidance, we will be sure to pass it along. In the meantime, please reach out to your contact at H&M with any questions related to the coordination of the Paycheck Protection Program and Employee Retention Tax Credit, or any other updates in the Consolidated Appropriations Act.