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Ppp gross receipts1/22/2024 Also, PPP loan recipients may still claim the ERC as long as the wages used to qualify for the PPP are not included in the ERC calculations.Īdditionally, IRS Notice 2021–23 and IRS Notice 2021–49 both explain that qualified wages may not be calculated using wages connected to the following: ![]() The IRS’ Revenue Procedure 2021–33 specifies that Shuttered Venue Operator Grants, Restaurant Revitalization Funds (RRF), and similar loans may not be counted as gross income when determining eligibility for the ERC. ERC wages interaction with PPP loans, SVOG grants, and similar funding There can be nuances in the definition of gross receipts at the state level so be sure to consult with your accountant to determine whether other income not listed above is included in your company’s gross revenue. Other income producing assets or activities.Gross receipts generally include the following types of income: The IRS defines gross receipts as “the total amounts the organization received from all sources during its annual accounting period, without subtracting any costs or expenses.” What are gross receipts under the ERC gross receipts test? In 2021, you can qualify for the ERC if your quarterly gross receipts decreased by 20% or more when compared to the same quarter(s) in 2019. The ERC gross receipts test is the most straightforward way to qualify for the Employee Retention Tax Credit though the specific definition of “decline” is different for 20.įor 2020, you can qualify for the ERC if your gross receipts for any quarter decreased by at least 50% when compared to the corresponding 2019 quarter. While we’ve already covered the suspended operations test, I’m going to cover the ERC gross receipts test in this article. There are two ways to qualify for the ERC, including the gross receipts test and the suspended operations test. The ERC is a refundable payroll tax credit that was introduced in the CARES Act in 2020 and subsequently updated by the Taxpayer Relief Act, the American Rescue Plan, and the Infrastructure and Jobs Act. This may be subject to change.You’re likely familiar with the Employee Retention Tax Credit (ERC), either because you’ve heard about lucrative payouts or you’ve seen or heard an ad about it. Note: The Economic Aid Act mentions calendar quarters, but the SBA and Treasury Department haven’t confirmed using calendar quarters. If you choose this route, you’re required to submit annual tax forms to support your decline calculation. If your business was in operation during all four quarters of 2019, you can compare total annual receipts in calendar year 2020 to 2019 instead of performing a quarter-by-quarter comparison. There’s an alternative approach to calculating the decline in gross receipts. If you had gross receipts of $50,000 in Q2 2019 and gross receipts of $30,000 in Q2 of 2020, you experienced a 40% revenue reduction. For example, i f you use Q 2 2020, you’ll compare it to Q 2 2019. Generally speaking, you’ll compare the gross receipts from a 2020 quarter to the same quarter in 2019. Reference pages 21-22 of the SBA’s interim final rule to learn more. If you weren’t in operation for all of 2019, your quarter comparisons will differ. Your quarters may change based on when you were in business. You experience at least a 25% reduction in gross receipts from one calendar quarter in 2020 to the same quarter in 2019. ![]() You can apply for a second draw loan if you meet the following requirements: Make sure to consider the affiliation rules when evaluating your eligibility for a second draw loan. In general, the same affiliation rules that apply to initial PPP loans apply to second draw loans.
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