Posted by ACCU Staff ● May 4, 2021 11:28:18 AM

Employee Retention Tax Credit: Case Study #2


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 #2

  • Christian K-12 School

  • Approximately 30 Employees

  • Received Paycheck Protection Program (PPP) funds

  • Eligible by business suspension

    • National orders

    • State orders

    • CDC guidelines

    • OSHA guidelines

  • Cumulative ERC to Date: $77,000

The State of Emergency order issued by the Governor closed all public schools in the county. While the Christian K-12 School is a private school not subject to the order, nevertheless, the School complied with the order and followed CDC Considerations for School Closure and transitioned its teachers and students to remote instruction. The school provided equipment for staff and students to transition to remote instruction for the rest of the school year. The School had to maintain this new system until June of 2020, which led to unexpected expenses due to the pandemic.

When school resumed in September of 2020, the School permitted in-person learning. The School implemented new cleaning processes in accordance with CDC and Department of Health guidance for schools. Staff was required to enhance sanitation, including cleaning frequently used surfaces such as desks and chairs in between each class period. Daily sanitation procedures were put into effect for each teacher such as sanitizing all door pulls, pencil sharpeners, and providing hand sanitizer for students. Staff was also required to monitor and enforce social distancing between students in the hallways, lunchroom, and playground facilities. The School had to reschedule classes and playground times to limit the number of students from different grades or classes interacting with each other. The School has incurred additional costs to provide teachers and students with PPE and sanitation equipment, such as foggers, UV lamps, cleaning supplies, masks, shields, and gloves.

The School experienced two closures during 2020 due to positive COVID-19 tests. The School closed for a week each time a positive test was received, and each student was tested to determine who could return. Teachers and students participated in classes remotely during these closures.

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