Employers May Be Able to Claim the Employee Retention Credit and Have a PPP Loan

Under section 206(c) of the Taxpayer Certainty and Disaster Tax Relief Act of 2020, an employer that is eligible for the employee retention credit (ERC) can claim the ERC even if the employer has received a Small Business Interruption Loan under the Paycheck Protection Program (PPP). The eligible employer can claim the ERC on any qualified wages that are not counted as payroll costs in obtaining PPP loan forgiveness. Any wages that could count toward eligibility for the ERC or PPP loan forgiveness can be applied to either of these two programs, but not both. Please disregard the "Caution" paragraph under the line instructions for "Nonrefundable Portion of Employee Retention Credit From Worksheet 1" in the instructions for your employment tax return as the information in that paragraph is no longer accurate after passage of the Taxpayer Certainty and Disaster Tax Relief Act of 2020.