February 10, 2021

Senators Hassan, Burr Urge Biden Administration to Provide Guidance to Employers to Help Them Secure Additional Small Business Relief Amid COVID-19 Pandemic

Year-End Package Included Bipartisan Hassan-Burr Legislation to Allow Small Employers to Utilize Both Federal Programs Created Under CARES Act to Help Provide Wages, Health Care to Employees

WASHINGTON – Following successful efforts by U.S. Senators Maggie Hassan (D-NH) and Richard Burr (R-NC) to include bipartisan legislation in the year-end funding bill to allow eligible small employers to participate in the Paycheck Protection Program and claim the Employee Retention Tax Credit, the Senators are now urging the Biden administration to issue guidance to help ensure that small businesses can fully participate in both programs. Prior to the passage of the Hassan-Burr bill, struggling employers could either participate in the Paycheck Protection Program or claim the Employee Retention Tax Credit, but could not benefit from both forms of assistance.

 

The Senators’ letter comes in response to concerns that they have heard about from businesses regarding their ability to fully access the Employee Retention Tax Credit if they have already reported all of their wages from 2020 as part of the Paycheck Protection Program forgiveness process. Since Paycheck Protection Program recipients were unable to receive the Employee Retention Tax Credit last year, many employers reported more wages then they needed to on their applications for Paycheck Protection Program forgiveness. Employers need clarity that rules meant to prevent “double-dipping” do not stop them from receiving the Employee Retention Tax Credit for these wages.

 

“We write to urge the Treasury Department and Internal Revenue Service to quickly issue guidance to ensure that struggling employers who have participated in the Paycheck Protection Program (PPP) can make full use of the Employee Retention Tax Credit (ERTC),” the Senators wrote. “As highlighted in recent reporting, employers require guidance clarifying that certain wages paid in 2020 are eligible for the ERTC. Clarification from your agencies will ensure that small employers receive the full economic assistance for which they are eligible as soon as possible.”

 

The Senators continued, “Treasury and IRS should provide guidance stating that the filing of a PPP loan forgiveness application does not constitute an election to forgo the ERTC with respect to the amount of wages reported on the application exceeding the amount of wages necessary for loan forgiveness. This guidance would reflect Congressional intent, and we urge you to take this into consideration as your agencies aim to quickly provide clarity on this issue.”

 

To read the Senators’ letter click here or see below:

 

Dear Secretary Yellen and Commissioner Rettig:

 

We write to urge the Treasury Department and Internal Revenue Service to quickly issue guidance to ensure that struggling employers who have participated in the Paycheck Protection Program (PPP) can make full use of the Employee Retention Tax Credit (ERTC). As highlighted in recent reporting,  employers require guidance clarifying that certain wages paid in 2020 are eligible for the ERTC. Clarification from your agencies will ensure that small employers receive the full economic assistance for which they are eligible as soon as possible.

 

The bipartisan relief package passed into law in December contained our bill, the Employer Assistance Coordination Act, which made small employers eligible for both the PPP and the ERTC. Our bill allows employers to use PPP and ERTC assistance to help keep workers on payroll, as long as employers do not “double dip” by receiving PPP forgiveness and claiming the ERTC for the same wages paid to employees. Prior to this change, struggling employers could either participate in the PPP or claim the ERTC, but could not benefit from both forms of assistance.

 

Since small employers who participated in PPP in 2020 were not eligible to claim the ERTC, the bipartisan year-end package also allowed these employers to retroactively claim the ERTC for wages paid in 2020. However, many employers who filed PPP forgiveness applications in 2020 reported wages over and above the wages necessary to receive maximum PPP loan forgiveness. Although employers did not receive PPP forgiveness covering these wages, the wages were reported on PPP forgiveness applications. As result, employers now require guidance clarifying that “double dipping” rules do not prevent them from retroactively claiming the ERTC for 2020 wages that, though reported on PPP forgiveness applications, were not covered by PPP forgiveness. 

 

Treasury and IRS should provide guidance stating that the filing of a PPP loan forgiveness application does not constitute an election to forgo the ERTC with respect to the amount of wages reported on the application exceeding the amount of wages necessary for loan forgiveness. This guidance would reflect Congressional intent, and we urge you to take this into consideration as your agencies aim to quickly provide clarity on this issue.

 

We thank you for your attention to urgent issue.

 

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