Yes, even if you have applied for a Paycheck Protection Program (PPP) loan, you can still collect the Employee Retention Credit (ERC). However, this was not always the case. The Consolidated Allocation Act (CAA) has allowed for relief, but it has also created complexity for taxpayers who received a PPP loan and who qualify for the ERTC. An employer may not receive the Employee Retention Credit if it receives a PPP loan authorized under the CARES Act. An eligible employer who receives a PPP loan, regardless of the date of the loan, cannot apply for the ERC.
An employer that is considered a single employer under the aggregation rules cannot receive the ERC if any member of the employer's aggregate group receives a PPP loan. For more information on aggregation rules, see Determining which entities are considered a single employer under aggregation rules. An employer receiving a PPP loan may not receive an Employee Retention Credit, regardless of if and when the loan is forgiven. For more information on eligible employers, see Determining Which Employers Are Eligible to Apply for the Employee Retention Credit. An acquiring employer that purchases the assets of a target employer that has received a PPP loan will not be considered to have received a PPP loan by virtue of the acquisition of assets, provided that the acquiring employer does not assume the obligations of the target employer under the PPP loan. In this case, the acquiring employer may apply for the Employee Retention Credit after the closing date of the transaction if they meet all requirements to apply for the credit.
In addition, any ERC requested by the acquiring employer for qualified wages paid before the closing date will not be subject to recovery under section 2301 (l) () (of the CARES Act).If, as part of the acquisition of assets and liabilities of the target employer, the acquiring employer assumes obligations of the target employer under the PPP loan after closing date of transaction, then generally they will not be considered to have received a PPP loan provided that they have not received a PPP loan before, on or after closing date. However, salaries that can be considered qualifying wages after closing date will be limited. Specifically, wages paid by acquiring employer after closing date to any person who was employed by target employer on closing date will not be considered qualifying wages. Subject to this limitation, acquiring employer may request Employee Retention Credit for qualified wages paid on and after closing date provided that they meet all requirements to apply for credit. Yes, but not for same wage payments. Any qualifying salary for which an eligible employer applies for Employee Retention Credit will not be considered for purpose of determining section 45S credit.
Therefore, an employer cannot request credit under section 45S with respect to qualified wages for which they are requesting ERC but may request credit under section 45S with respect to any additional wages paid provided that requirements of section 45S with respect to additional wages are met. An eligible employer cannot apply for ERC and WOTC for same employee for same period of time. One of most common misconceptions among companies is that they believe they do not qualify for ERTC if they opt for PPP funding round. In fact it is quite possible for companies to take advantage of both types of COVID relief funds but there may be some interaction between two programs. Companies must be careful not to fall between PPP and ERTC especially when it comes to salaries.