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Treasury and the SBA Issue Guidance Regarding the Employee Retention Credit

SANFORD MICHELMAN, BRYAN JOHNSON
MAY 8, 2020


Guidance continues to be issued by U.S. Treasury and the SBA regarding the Paycheck Protection Program. On the heels of extending the so-called “safe harbor repayment” date from May 7 to May 14, 2020, Treasury and the SBA have offered PPP-related insight into an employer’s eligibility for the Employee Retention Credit under the CARES Act.

Like the PPP, the Employee Retention Credit encourages businesses to keep employees on their payroll. The refundable tax credit is 50% of up to $10,000 in wages paid by an eligible employer whose business has been financially impacted by COVID-19.

Ordinarily, an employer that receives a PPP loan may not receive an Employee Retention Credit, regardless of whether and when the loan is forgiven. However, pursuant to its most recent FAQ, Treasury and the SBA have declared that any employer that applied for a PPP loan, received payment, and repays the loan by May 14, 2020 will be treated as though it had never received a PPP for purposes of the Employee Retention Credit. The upshot: such an employer can avail itself of the tax credit, assuming that it is an otherwise eligible employer.


We are working diligently to keep our clients up to date on coronavirus-related developments. Nevertheless, these developments are changing daily and, in some cases even hourly, so it is important that you make sure you are dealing with the most current information. That being said, this alert is not offered, and should not be relied on, as legal advice. You should consult an attorney for guidance and counsel regarding any specific concern or situation.