Q&A on Economic Retention Credit in CARES Act

The following is an FAQ document on the Economic Retention Credit included in the Coronavirus Aid, Relief and Economic Security Act, known as the CARES Act.

What businesses qualify for the employee retention credit?

Any employer, regardless of size, is eligible for the credit during calendar year 2020 if the business: (1) is fully or partially suspended due to a governmental order related to COVID-19, or (2) experiences a significant decline in gross receipts (i.e., a reduction of 50% of gross receipts from the same quarter in 2019). The credit also applies to tax-exempt organizations if the operation of the organization is fully or partially suspended due to the circumstances described in (1) above. The credit generally does not apply to governmental employers, including the U.S. government, state and local governments, or any agency of the foregoing.

Is the credit limited to businesses affected by COVID-19?

Yes. The credit only applies to qualified wages paid by a business whose operations have been fully or partially suspended pursuant to a governmental order related to COVID-19, or have experienced a significant decline (i.e., 50%) in gross receipts, as described above, during the period from March 13, 2020, through Dec. 31, 2020.