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ADA supports proposed legislation to enhance Employee Retention Tax Credit

June 17, 2020

By Jennifer Garvin

Washington — The ADA and a large coalition of stakeholders led by the International Franchise Association are supporting a new bill calling for improvements to the Employee Retention Tax Credit to aid businesses recovering from the pandemic.

The Employee Retention Credit is a refundable tax credit against certain employment taxes equal to 50 percent of the qualified wages an eligible employer pays to employees after March 12, 2020, and before Jan. 1, 2021. The credit was included as part of the Coronavirus Aid, Relief, and Economic Security Act to assist businesses financially impacted by COVID-19.

In a June 15 letter to Reps. Stephanie Murphy, D-Fla., and John Katko, R-N.Y., the organizations thanked the lawmakers for introducing HR 6776, the Jumpstarting Our Businesses’ Success Credit Act of 2020.

“Thank you for your strong, bipartisan leadership on HR 6776, which will make several improvements to the Employee Retention Tax Credit and better fulfill its goal of keeping workers connected to their jobs during the COVID-19 pandemic,” the groups wrote.

If enacted, the Jumpstarting Our Businesses’ Success Credit Act would expand and enhance the tax credit by:

• Expanding the credit percentage from 50% to 80% of qualified wages.
• Increasing the per-employee limitation from $10,000 for all calendar quarters to $15,000 per calendar quarter — and an aggregate of $45,000 for all calendar quarters.
• Changing 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) or having gross receipts above $41.5 million in 2019.
• Adding a phased-in credit to allow employers with more than a 20% decline in gross receipts to be eligible for a portion of the credit.
• Improving coordination between the Employee Retention Tax Credit and the Paycheck Protection Program so employers can be eligible for both programs, but “with guardrails in place to prevent ‘double dipping.’ ”

“Thank you again for your swift, bipartisan leadership that will support both workers and employers to better enable a robust economic recovery,” the letter concluded. “These important enhancements to the Employee Retention Tax Credit will provide critical relief to employers as they continue to grapple with liquidity challenges during the pandemic.”

For more information about the ADA’s advocacy efforts during COVID-19, visit www.ADA.org/COVID19Advocacy.