Agencies can still get money from the federal government for pandemic damage: Travel Weekly
Q: I’ve heard it’s still possible to get federal funds for losses our agency has suffered during the pandemic. Is this money in addition to Paycheck Protection Program payments? If so how much do I get and how do I get it?
A: The federal program that is still in effect is called the Employee Retention Credit (ERC). It is a poorly named program as the amount you can receive is unrelated to the taxes you pay.
To qualify, companies must have a sales decline of at least 50% in 2020 compared to 2019, or a decline of at least 20% in 2021 compared to 2019, or they had to operate under significant government restrictions, which certainly includes almost all travel includes business.
The ERC is a credit that first offsets wage tax. Then the part that is not used for the credit is returned to the employer. Employers can receive a benefit of up to 50% of the first $10,000 of wages per employee for 2020 and up to 70% of the first $10,000 of wages per quarter for the first three quarters of 2021, for a total of up to $26,000 per employee you maintained in 2020 and 2021.
Here’s the catch: First, it’s not available to the business owners themselves; It is also not available to your independent contractors. Second, you must exclude payments that were used to determine the proceeds of your forgiven PPP loans.
Each of the two PPP loans was suitable for a maximum of two and a half months’ salary. So if you received both PPP loans and they were forgiven, you can only count the portion of the compensation in excess of five months’ salary.
It’s not too late to claim the ERC as you have one year left to do so. You must file a Form 941-X, which allows you to amend your previously filed Form 941, which is the employer’s withholding tax return. You need such a form for each of the four quarters of 2020 and the first three quarters of 2021.
Then you need to submit Form 7200 to get the refund. If you have more than 100 employees, you are subject to reimbursement restrictions, and if you have more than 500, you cannot be reimbursed.
You will likely need the assistance of your accountant as the program is more complicated than the PPP. I’ve read that some accountants tell their clients that if you’ve already received a PPP loan and you’ve been forgiven, you can’t apply for an ERC, but that’s not true.
After requesting a refund, you will have to wait as the IRS takes a long time to send out refunds. As of this June, it’s taking an average of nine months, but the process is likely to slow in the coming year as more employers realize they can get that money.