PRLA Restaurant & Lodging Matters Spring 2021

Spring 2021 • PENNSYLVANIA RESTAURANT & LODGING matters • 9 ERTC for Small Business Expanded to Include All of 2021 The American Rescue Plan Act extends the Employee Retention Tax Credit to Dec. 31. WHILE THERE HASN’T been a lot of good news for restaurants during the pandemic, the American Rescue Plan Act (ARPA) contains several helpful measures, especially for smaller businesses. One bright spot is the extension of the Employee Retention Tax Credit (ERTC) from June 30 of this year to December 31, 2021. Now, if you’re eligible, you can access ERTC for up to $7,000 per eligible employee per quarter for all of 2021, for a potential total credit of $28,000 per employee. The ARPA also includes $28.6 billion for Restaurant Revitalization Fund Grants that are administered by the SBA. If you receive a grant, you can use it for payroll expenses in 2021. If you choose to meet payroll expenses with grant funds in any quarter, you can’t receive an ERTC for that period. The SBA and IRS plan to release more details on this coordination. Here’s a reminder of how the ERTC works. ELIGIBLE RESTAURANTS. Restaurants with 100 or fewer full- time employees can access the ERTC for employees working in 2020. Companies with 500 or fewer full-time equivalent employees (FTEs) can access the ERTC for those employees working in 2021. The tax credits are only available for payroll wages and/or group benefits you didn’t pay directly with PPP loan funds. Your employer status (small or large) is based on the aggregate number of FTEs you employed in 2019. ELIGIBLE EMPLOYEES. FTEs are those who work at least 30 hours per week or 130 hours per month. If you first opened in 2019, calculate the number by taking the sum of the number of FTEs in each full calendar month your restaurant was open in 2019 and divide by the number of months. If you first opened in 2020, use the same approach to calculate your FTEs. 