The Employee Retention Credit Offers Significant Benefits for the Construction Industry By David Hegstrom – Harris CPAs
T
he construction industry took a brutal hit when the COVID-19 pandemic drove millions of construction sites to a screeching halt.
For some, projects resumed quickly; however, skyrocketing material costs and worldwide supply chain disruptions continue to affect virtually every employer across the industry. Luckily, the IRS issued welcomed relief for employers that kept employees on their payroll despite the hardships of the pandemic. In a labor-heavy field, the Employee Retention Credit (ERC) could offer significant benefits for many employers
across
the
construction
industry. 46 BUILDING IDAHO • 2021 FALL/WINTER
WHAT IS THE EMPLOYEE RETENTION CREDIT? The Employee Retention Credit (ERC) was created by the Coronavirus Aid, Relief and Economic Security (CARES) Act in March 2020. Between sweeping lockdowns and strict government mandates, the ERC was designed as an incentive for businesses to keep employees on their payroll during the pandemic. As COVID-19 continued to wreak havoc well into 2021, the IRS extended the ERC through the end of 2021 as part of the American Rescue Plan Act. WHO QUALIFIES? As an industry widely impacted by COVID-19, most construction businesses have a pretty good chance of reaping the
benefits of the ERC. However, determining the extent of that benefit can get a little complicated due to varying rules based on the year in which you qualify as an eligible employer. On the most basic level, an eligible employer must have experienced at least one of the following two scenarios: 1. The business shut down operations (either entirely or partially) due to government mandates or reduced business. 2. The business experienced a significant quarterly revenue decrease compared to the same quarter in 2019. For 2020, that is 50 percent compared to the same quarter in 2019, and for 2021 it is 20 percent compared to the same quarter in 2019.
