The HEROES Act would make significant changes to the Employee Retention Tax Credit including:
- Increasing qualified wages to $15,000 per quarter for up to three quarters (maximum credible wages would be $45,000) up from the current $10,000;
- Increasing the percent of the credit to 80% from the current 50% (this would make the maximum credit $12,000 per quarter or $36,000 over three quarters;
- Codifying that the proportional amount of health care insurance paid for an employee by the employer during the period that the business was closed, operating at a reduced capacity, or who’s income is between 50% and 90% of what it was during the same quarter of the precious year is eligible for the ERTC regardless of whether the employee was paid wages;
- Defining a large employer as having 1,500 full time equivalent employees as opposed to the HEROES Act which sets the threshold at 100 employees;
- Modifying the revenue loss test for businesses not subject to a government shutdown order by phasing out the credit between a 50% and 90% loss of gross receipts. Currently there is no phase out – eligibility ends at the point that gross receipts exceed 50% for the same calendar quarter during the previous year;
- Qualified wages would include tips deemed to be paid by the employer;
- Allowing employers to qualify for both a Payroll Protection Program loan and the Employee Retention Credit, but not for the same wages. Currently, employers cannot qualify for both.