SOA of NY offers important information for horsemen

Yonkers, NY — To all SOA of NY members, please check with your accountant as this may be very useful.

The application for the Paycheck Protection Program (PPP) shows what was believed to wit: That applicants who derive more than one-third of gross annual revenue from legal gambling activities are not eligible for the program. To the extent that is a disqualifying factor for any horseman, the “Employee Retention Credit for Employers Subject to Closure or Experiencing Economic Hardship” (ERC) which is also part of the Stimulus package is worth a hard look. ERC may be an alternative for horsemen to consider. (See the summary below):

Employee Retention Credit for Employers Subject to Closure or Experiencing Economic Hardship

This provision would provide a refundable payroll tax credit for 50 percent of wages paid by eligible employers to certain employees during the COVID-19 crisis. The credit is available to employers, including non-profits, whose operations have been fully or partially suspended as a result of a government order limiting commerce, travel or group meetings. The credit is also provided to employers who have experienced a greater than 50 percent reduction in quarterly receipts, measured on a year-over-year basis.

Wages of employees who are furloughed or face reduced hours as a result of their employer’s closure or economic hardship are eligible for the credit. For employers with 100 or fewer full- time employees, all employee wages are eligible, regardless of whether an employee is furloughed. The credit is provided for wages and compensation, including health benefits, and is provided for the first $10,000 in wages and compensation paid by the employer to an eligible employee. Wages do not include those taken into account for purposes of the payroll credits for required paid sick leave or required paid family leave, nor for wages taken into account for the employer credit for paid family and medical leave (IRC sec. 45S).

The credit is not available to employers receiving assistance through the Paycheck Protection Program. The credit is provided through Dec. 31, 2020.

From what we can tell, the ERC is not as generous as the PPP, but it still has significant upsides in the form of a tax credit. (As the notation above indicates, employers receiving assistance in the PPP are ineligible for ERC). Below is a link to the FAQ for the ERC.

CARES Act: Employee Retention Credit FAQ

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