PIA Supports Employee Tax Credit Reform Bill

PIA National was joined by over 100 other business groups to support the Jumpstarting Our Businesses’ Success Credit (JOBS Credit) Act of 2020 (H.R. 6776), which will make several improvements to the Employee Retention Tax Credit (ERTC).

The ERTC, which was created by the CARES Act, encourages businesses of all sizes to retain their employees, allowing workers continue to receive income and employer-sponsored health insurance without unemployment benefits. The ERTC also better positions workers and businesses to resume normal operations once the COVID-19-prompted closures come to an end.

The ERTC is a refundable tax credit equal to 50 percent of up to $10,000 in qualified wages that eligible employers, including non-profits, pay to employees between March 12, 2020 and January 1, 2021, up to a maximum of $5,000 per employee. To be eligible, an employer must have partially or fully shut down operations due to COVID-19, or the employer must have experienced a “significant decline in gross receipts,” which is defined as having gross receipts that are 50 percent less than the gross receipts from the same quarter in the prior calendar year.

Since its implementation, the business community has supported reforms to the ERTC to make it more useful for employers.

To that end, the JOBS Credit Act would make several improvements, including:

  • An increase, from 50 percent to 80 percent, in the percentage of qualified wages eligible for the tax credit;
  • An increase to the per-employee limitation from $10,000 for all calendar quarters to $15,000 per calendar quarter (and an aggregate amount of qualified wages of $45,000 for all calendar quarters, for an allowable credit amount of $36,000);
  • A change to the threshold for treatment as a large employer, from employers having more than 100 employees, to employers having more than 1,500 employees (based on the average number of full-time employees in 2019) and having gross receipts above $41.5 million in 2019;
  • Expanding qualification for the tax credit by permitting a phased-in credit, which will allow employers with more than a 20 percent decline in gross receipts to claim a portion of the credit; and
  • Improving coordination between the ERTC and the Paycheck Protection Program so employers can be eligible for both programs, but with guardrails in place to prevent “double dipping.”

PIA National will continue to work with Congress to provide as much assistance as possible for small businesses during this time, including our advocacy for the creation of a COVID-19 Recovery Fund.