On March 11, 2021, President Biden signed the $1.9 Trillion American Rescue Plan Act of 2021 into law. ARPA included a provision expanding the Employee Retention Tax Credit (ERTC) to include “Recovery Startup Businesses (RSB)” – those that opened after 2/15/20 with annual revenue of less than $1 Million.
The ERTC for RSB’s is only available for Q3 and Q4 of 2021 and is equal to 70% of the first $10k paid to each employee per quarter, capped at $50k per quarter. And unlike established businesses, an RSB does not need to show a decrease in revenue or being impacted by a government shutdown to qualify.
It appears that eligible startup businesses will claim this valuable tax credit just by checking a box that will be available on their Q3 and Q4 quarterly payroll tax filing Form 941. The IRS recently issued guidance for this valuable payroll tax credit at: https://www.irs.gov/instructions/i7200.