Yes, you can request both the Payroll Protection Program (PPP) loan forgiveness and the Employee Retention Credit (ERC). However, an employer may not receive the employee retention credit if it receives a PPP loan authorized under the CARES Act. An eligible employer who receives a PPP loan, regardless of the date of the loan, cannot apply for the employee retention credit. An employer that is considered a single employer under the aggregation rules cannot receive the employee retention credit if any member of the employer's aggregate group receives a PPP loan.
An acquiring employer that purchases the assets of a target employer that has received a PPP loan will not be considered to have received a PPP loan by virtue of the acquisition of assets, provided that the acquiring employer does not assume the obligations of the target employer under the PPP loan. In this case, the acquiring employer may apply for the employee retention credit after the closing date of the transaction if they meet all requirements to apply for it. In addition, any employee retention credit requested by the acquiring employer for qualified wages paid before the closing date will not be subject to recovery under section 2301 (l) () (of the CARES Act). An eligible employer cannot apply for both an employee retention credit and a Work Opportunity Tax Credit (WOTC) for the same employee for the same period of time.
The difference between the Payroll Protection Program and employee retention credits covers three main areas: type of funding, time at which companies receive funding, and cost of program. The ERC is a valuable tax relief that was expanded and amended by the United States Rescue Plan Act (ARPA). However, unlike what was previously a Social Security tax credit, in the second half of 2021, it will be a Medicare tax credit. In addition to PPP, companies have an opportunity to take advantage of employee retention credits.
Eligible salaries depend on number of full-time employees (FTE), but salaries of landlord and related persons are not eligible for credit. Funds received from employee retention credits or from Payroll Protection Program can help businesses succeed for years to come.