Eligibility for the Employee Retention Tax Credit Program is determined based on the size of the business, revenue decline, and whether the business was required to partially or fully shut down due to government orders. Any business with employees can potentially qualify for the program, including non-profits and government entities.
Businesses with 500 or fewer employees are generally eligible for the full credit amount of up to $7,000 per employee per quarter. For businesses with more than 500 employees, there are additional rules and limitations. For example, only wages paid to employees who are not working due to a COVID-19-related reason are eligible for the credit.
In addition to the size of the business, eligibility is also determined based on the percentage of revenue decline. To qualify for the credit, businesses must have experienced a 50% decline in revenue compared to the same quarter in 2019. This decline must have occurred during a quarter in which the business was either fully or partially suspended due to government orders or when the business’s gross receipts were less than 50% of the gross receipts for the same quarter in the prior year.
The Employee Retention Tax Credit Program is also available to new businesses that were not in operation during the first and second quarters of 2019. These businesses may be eligible for the credit if they experienced a significant decline in revenue during the first, second, or third quarter of 2020 compared to the fourth quarter of 2019.