Posted by ACCU Staff ● May 4, 2021 11:22:05 AM

Employee Retention Tax Credit: Case Study #1


The CARES Act includes an Employee Retention Tax Credit (“ERC”), a fully refundable tax credit for employers equal to seventy percent (70%) of qualified wages (including allocable qualified health plan expenses) that Eligible Employers pay their employees in each quarter in 2021, or fifty percent (50%) of qualified wages for the 2020 calendar year. Employers can claim an ERC of up to $7,000 per calendar quarter per employee for qualified wages paid between January 1, 2021 and December 31 2021, and up to $5,000 per year for wages paid between March 13, 2020 and December 31, 2020.

Case Study #1

  • Church & School
  • Approximately 70 Employees
  • Received Paycheck Protection Program (PPP) funds
  • Eligible by business suspension
    • National orders
    • State orders
    • CDC guidelines
    • OSHA guidelines
  • Cumulative ERC to Date: $620,000

As a house of worship whose operations depend on the ability of worshipers to visit the church and take part in services, the Church’s operations continue to be severely impacted in 2021 by the COVID-19 pandemic and the government orders put in place to cope with it. The latest state executive order restricted the occupancy of a place of worship to 50% (up from the previous 25%). Additionally, the governor issued a new order which allowed venues to host receptions, such as those for weddings and funerals, hosting no more than 50 people.

The Church was also impacted by their duty to comply with the guidelines provided by the Department of Health and the CDC regarding sanitation and social distancing. The Church maintained an enhanced regimen of cleaning and disinfecting to follow these guidelines resulting in increased unbudgeted expenses (cleaning supplies, hand sanitizers, electrostatic sprayers, and PPE) and the diversion of staff from their normal duties.

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