On August 10, 2021, the IRS and the Department of the Treasury provided new guidelines regarding the Employee Retention Credit (ERC) via a safe harbor, allowing employers to exclude specific items from their gross receipts only when determining if the qualifications for the ERC are met.

Last week the Small Business Administration (SBA) announced the launch of its Paycheck Protection Program (PPP) loan forgiveness portal, which opens August 4, 2021, to streamline applications for PPP loans of $150K or less. Concurrently, the new COVID Delta variant is now a cause for concern as cases in New Jersey have quadrupled since last month.  The combination of these events has many business owners concerned since it appears that the PPP will not be replenished with additional funding. They’re left wondering, what will happen if restrictive government orders are reimposed and how will businesses be able to survive yet another COVID wave?

Since the closure of the Paycheck Protection Program (PPP), Restaurant Revitalization Fund, and other Small Business Administration (SBA) COVID-19 relief programs, New Jersey and Pennsylvania-area businesses have been searching for funding alternatives. Over the past few months, the Employee Retention Credit (ERC), a payroll-based tax credit, has moved to the forefront. The ERC provides an immediate savings opportunity to businesses that experienced a decline in gross receipts in either 2020, 2021, or both.

During the COVID-19 pandemic, many New Jersey and Pennsylvania businesses faced significant operational, financial, and working capital challenges. Due to government regulations, the almost overnight changes often left companies with no way to generate income or pay expenses. These challenging circumstances forced some to close while others sought to take advantage of new federal relief opportunities available through the Small Business Administration (SBA).

For New Jersey and Pennsylvania-area businesses substantially affected by COVID-19, the Employee Retention Credit (ERC) has been a valuable incentive to keep employees on the payroll. Since it was introduced in March 2020 as part of the CARES Act, the ERC has undergone several modifications and extensions, including those made in the Taxpayer Certainty and Disaster Tax Relief Act of 2020 (Relief Act) and again in March 2021 under the American Rescue Plan Act.

On March 31, 2021, the Biden Administration released an overview of The American Jobs Plan (Plan), which broadly outlines a proposed $2T modernization investment in the nation’s transportation, environmental and digital infrastructure and spread over eight fiscal years. The Plan includes fixing highways, upgrading ports, airports, and other transit centers. It calls for the modernization of public buildings, including federal facilities, upgrades to water delivery infrastructure, and revitalization of American manufacturing and innovation.

The challenges presented by a year-long struggle against the COVID-19 pandemic continue to persist for New Jersey and Pennsylvania-area individuals and businesses.

The COVID-19 pandemic has created challenging conditions for businesses across New Jersey and Pennsylvania. The environment changed almost overnight with stay at home orders and forced business closures and has persisted through restrictions and new safety guidelines.