Understanding the Employee Retention Tax Credit in Mississippi

Mississippi Employee Retention Tax Credit Explained

Mississippi Employee Retention Tax Credit Explained

The Covid pandemic created havoc for businesses and their employees who lost revenues and were forced to shut down or lay off their workers for a long period of time. The Employee Retention Tax Credit is available to businesses that have experienced economic hardship due to the COVID-19 pandemic. The credit is designed to encourage employers to keep their employees employed and on payroll, even if their business has suffered financially as a result of the pandemic.

Eligible employers may be able to take advantage of this tax credit for up to 50 percent of qualified wages paid from March 13, 2020, until December 31, 2021. To qualify for the credit, employers must meet certain criteria including having an eligible business entity type, having gross receipts that are below certain thresholds or experiencing a full or partial suspension of operations due to governmental orders related to COVID-19, among other requirements.

What Businesses Qualify for the Tax Credit

The following problems qualify Mississippi employers again for this benefit for 2020, especially tax-exempt organizations:

  • A total or partial suspension of their trade or activities during any calendar quarter due to government instructions banning gatherings of groups, commerce or travel
  • The company’s gross receipts dropped significantly and operations were suspended

Gross receipts were significantly decreased when the following situations occurred:

  • January 1, 2020, marked the beginning of the first fiscal quarter.
  • A recovery startup firm’s overall receipts were about half of what they were during the previous quarter.

Gross revenues have returned to normal after the significant decline:

  • From the first day of the calendar quarter following the previous quarter
  • The gross receipts exceed 80 percent of the total revenue
  • Quarterly results for the same period in 2019

Credit can be claimed for salaries that qualify and were paid during this time period or any calendar quarter, which includes halted health insurance costs.

In Mississippi, Businesses May Be Entitled to a Credit for Employee Retention

With the Retaining Employees Credit (ERC) included in the CARES Act, businesses were encouraged to keep their employees. ERC applications can be submitted for salaries received before March 13, 2020, and October 30, 2021. It does not matter if the employer received PPP or SBA loans. They can still receive benefits through the ERC. Each W-2 employee may receive up to $26,000, which is the equivalent of half of their wages in 2020 up to $10,000. During the first three quarters of 2021, they may receive up to 70 percent of their income up to $10,000.

Help in Determining Eligibility

In order to determine your ERTC eligibility, tax attorneys specializing in this area will conduct a detailed analysis of your business. We will prepare and file application documents with the IRS. Your ERTC claim will be processed by the IRS within six to eight months,  and your credit checks will be mailed directly to your company.

Diaz Law Firm

To discuss your options going forward, contact the Diaz Law Firm for a free case review. We can provide legal advice or representation if you need it. Call us today to schedule a consultation at either (601) 607-3456 or (800) 459-2222 or online. You can also complete our tax credit form.