Feb 12, 2021, 12:05 PM
(from PKF O'Connor Davies) The Employee Retention Credit (ERC) is a strong option for independent schools looking for financial support. The ERC is a credit against Social Security taxes owed by an employer on “qualified wages.” To the extent the credit amount exceeds the amount of Social Security tax due on the wages paid, it is refundable. Businesses are eligible if they are closed (fully or partially) because of a government order related to COVID-19 or have experienced a significant decline in gross receipts.
Initially implemented as part of the CARES Act, the ERC had limited utility in 2020 because it was only available to organizations that did not receive PPP loans. The Consolidated Appropriations Act (Act), approved in late December 2020, retroactively removed the restriction on PPP loan borrowers claiming the ERC. The Act also extends the credit into 2021, while providing for wider eligibility and a far larger maximum credit in 2021. The details of that expansion could be a large boon to independent schools in particular.
PKF O'Connor Davies presented an NBOA webinar on this topic, "Employee Retention Credit & PPP 2.0: Solving the Puzzle for Your School." NBOA members can view the recording in the webinar archive.
Related content: COVID-19-Related Employee Retention Credits FAQ
years is the target ceiling for a school plant's financial "age."