The benefits provided by the CARES Act are not limited to employers with fewer than 500 employees. There are a number of provisions available regardless of the size of the business — meaning that large employers can benefit too. Below is an explanation of the payroll-related provisions that are not entirely dependent upon the number of employees:
Employee Retention Credit
An employee retention credit is available to eligible employers if the business was forced to suspend or close due to COVID-19. An employer is eligible for the credit if:
- The business suspended operations due to government orders in response to COVID-19, or
- The business experienced a 50% decrease in gross receipts for the same quarter in 2019.
An eligible employer is any employer, regardless of size, that meets either number 1 or 2 above.
Eligible employers will receive a 50% credit on qualified wages against their employment taxes for each quarter during which they continue to meet the criteria.
- Applicable Periods
- The credit will first be available beginning with the quarter in which gross receipts declined by more than 50% from the same quarter in the prior year.
- The eligibility period will end with the quarter in which gross receipts have recovered to more than 80% of the corresponding period in the prior year.
- The full benefit will currently expire December 31, 2020.
- Qualified wages are based on the size of the business
- If, on average, the employer has more than 100 full-time employees in 2019, qualified wages are all wages paid to employees not performing services during the time the business was shut down.
- If the employer has less than 101 full-time employees in 2019, qualified wages are all wages paid to employees during either of the above described events regardless of whether the employee performed services.
- Limitation and logistics
- The credit is available for up to $10,000 in wages for each employee and may be taken against employment taxes only. The credit is reduced by any credits taken under the Families First Coronavirus Response Act. Credit in excess of the employer liability will be refunded.
Delay of Payment of Employer Payroll Taxes
Employers and self-employed individuals may:
- Defer payments of the employer share (6.2% of employee wages) of Social Security payroll taxes that would have otherwise been owed from April 1, 2020 through December 31, 2020.
- The deferred taxes must be paid over a two-year period, with half the amount required to be paid by December 31, 2021, and the other half by December 31, 2022.
NOTE: Neither of these benefits are available to businesses that will have their Paycheck Protection Plan Loan forgiven.