Wyden Announces Expanded Employee Retention Tax Credit to Keep Workers on the Job, Help Small Businesses Survive

Washington, D.C. — Senate Finance Committee Ranking Member Ron Wyden, D-Ore., today announced that his proposal to expand the employee retention tax credit to keep workers on the job and help struggling small businesses survive is included in the end-of-year tax package. 

“This economic crisis has been an extinction level event for small businesses. More than 100,000 small businesses have already been lost, and without additional support, many more will be permanently shuttered. Oregon is a small business state, and I know how desperately small business owners need additional relief,” Senator Wyden said. “My proposal to expand the employee retention credit will ensure help is accessible to those small businesses struggling to survive. Importantly, it also clarifies that small businesses that received PPP funding may also use the employee retention credit to cover other wages. Ensuring businesses can access relief from both programs is critical.” 

A summary of Wyden’s proposal follows:

·       Increases the credit rate from 50 percent to 70 percent of qualified wages;

·       Expands eligibility for the credit by reducing the required year-over-year gross receipts decline from 50 percent to 20 percent and provides a safe harbor allowing employers to use prior quarter gross receipts to determine eligibility;

·       Increases the limit on per-employee creditable wages from $10,000 for the year to $10,000 for each quarter;

·       Increases the 100-employee delineation for determining the relevant qualified wage base to employers with 500 or fewer employees;

·       Allows certain public instrumentalities to claim the credit;

·       Removes the 30-day wage limitation, allowing employers to, for example, claim the credit for bonus pay to essential workers;

·       Allows businesses with 500 or less employees to advance the credit at any point during the quarter based on wages paid in the same quarter in a previous year;

·       Provides rules to allow new employers who were not in existence for all or part of 2019 to be able to claim the credit; and

·       Provides for a small business public awareness campaign regarding availability of the credit to be conducted by the Secretary of the Treasury in coordination with the Administrator of the Small Business Administration.

Retroactive to the effective date included in section 2301 of the CARES Act, the proposal:

·       Clarifies the determination of gross receipts for certain tax exempt organizations;

·       Clarifies that group health plan expenses can be considered qualified wages even when no other wages are paid to the employee, consistent with IRS guidance; and

·       Provides that employers who receive Paycheck Protection Program (PPP) loans may still qualify for the ERTC with respect to wages that are not paid for with forgiven PPP proceeds.