WASHINGTON—A pro-worker, pro-business measure spearheaded by U.S. Rep. Stephanie Murphy of Winter Park, Fla., has been included in a bipartisan bill passed by the Senate today to combat the public health and economic crisis caused by coronavirus. For nearly a month, Murphy has been pushing her proposal, the Employee Retention Tax Credit, to be part of any package passed by Congress to support American families and businesses and has been actively working with multiple Senate offices to ensure its inclusion in the Senate-passed Coronavirus Aid, Relief, and Economic Security (CARES) Act. The House is expected to pass the CARES Act this week and then send it to President Trump for his signature.
“Coronavirus is an unprecedented public health and economic crisis requiring an unprecedented response from the federal government,” said Murphy. “I’m pleased we were able to get an employee retention tax credit in this package, which hopefully will soon become law. This credit will help employers – especially small businesses – retain and pay their employees rather than lay them off. This measure will prevent layoffs, ensuring Americans affected by this virus will have a job after this crisis is over.”
The key provisions of the Murphy-backed ERTC (Section 2301 of the CARES Act) are as follows:
The credit is equal to 50 percent of qualified wages (including health expenses) paid to an employee after March 12, 2020 in each calendar quarter, up to a total of $10,000 per employee for all quarters.
The credit is taken against employment taxes, with any excess refunded to the employer.
For employers with 100 or fewer employees (measured by average employment in 2019), the credit applies if the employer had to fully or partially suspend operations due to an order from a governmental authority, or had a decline in revenue for any calendar quarter in 2020 of 50% compared to the same quarter in 2019.
For employers with over 100 employees, the same conditions apply but the credit applies only to wages paid to employees who are on payroll but not working.
The credit covers qualified wages paid after March 12, 2020 to December 31, 2020. The credit expires when (1) the full $10,000 per employee maximum is reached, or (2) when revenue for a quarter in 2020 is above 80% of gross receipts for the same quarter in 2019.
The credit applies to tax-exempt organizations, including non-profit organizations.