ERTC Recovery Startup Provision
New businesses may have been able to claim ERTC for the full year in 2021, even if other employers couldn’t. To qualify for the ERTC Recovery Startup Provision, the business must:
- Have started on or after February 15, 2020
- Have $1 million or less in gross receipts
- Not otherwise be eligible because there was no full or partial closure or decline in gross receipts
Under the provision, qualified businesses may claim up to $50,000 per quarter in 2021 for all employees. New businesses that received other COVID-19 funding such as the Restaurant Revitalization Fund or Shuttered Venue Operators Grant may not qualify. There are other considerations; check with your Adams Brown advisor for more information.
ERTC in 2020 and 2021
When the CARES Act introduced ERTC in March 2020, it limited use of the tax credit. The Consolidated Appropriations Act later expanded ERTC, and the American Rescue Plan Act implemented even more changes. These are the basic requirements for each iteration of ERTC.
- Mar. 12, 2020 – Dec. 31, 2020: 50% of eligible wages up to $5,000 per employee annually and 50% decline in gross receipts per quarter
- Jan. 1, 2021 – Sept. 30, 2021: 70% of eligible wages up to $21,000 per employee annually and 20% decline in gross receipts per quarter
- July 1, 2021 – Dec. 31, 2021: New businesses that began operations after 2/15/20 were eligible for the Recovery Startup Provision