The American Rescue Plan Act of 2021, passed on March 11, 2021, included new eligibility criteria for startup businesses to allow them to take advantage of the Employee Retention Tax Credit (ERC) beginning in the 3rd quarter 2021. A recovery startup business under the Recovery Startup Provision, is defined as a business who:

• Began operations after February 15, 2020 and
• Have less than $1 million in average annual gross receipts

If a business meets the definition of a recovery startup, they can now qualify for the ERC without a decline in gross receipts or being subject to a government shutdown. It is important to know that a recovery startup can be an entirely new company or a new product or service offering within an existing business.

Any employer that meets the criteria of a recovery startup business, is eligible for credits equal to 70% of wages paid to each employee per quarter up to a maximum of $10,000 per quarter. The total credit an employer can take under the Recovery Startup Provision can not exceed $50,000 per quarter.

The Recovery Startup Provision is only available for the 3rd and 4th quarter 2021, so reach out to Holbrook & Manter with any questions to take advantage of the credit.