The CARES Act's Employee Retention Credit is a fully refundable tax credit.  For the 2020 program, the ERC is equal to 50% of qualified wages (including allocable qualified health plan expenses) that eligible employers pay their employees.  This applies to wages paid after 3/12/2020 and before 1/1/2021.  The maximum amount of wages taken into account with respect to each employee for all calendar quarters is $10,000, so that the maximum credit for an employee is $5,000.

For the 2021 program, the credit is increased to 70%, and the limit is $10,000 per quarter.  This means the annual maximum for an employee is $28,000.

The tax credit offsets all withheld federal employment taxes including federal income tax withholding, Employer FICA and Medicare. Any excess credit will be refunded or advanced by the IRS.

Eligible Employers for the purposes of the Employee Retention Credit are those that carry on a trade or business during calendar years 2020/2021, including a tax-exempt organization, that either:

• Fully or partially suspends operations by a governmental order, or
• Experiences a significant decline in gross receipts during a calendar quarter when compared to 2019

The operation of a trade or business may be partially suspended if an appropriate governmental authority imposes restrictions upon the business operations by limiting commerce, travel, or group meetings (for commercial, social, religious, or other purposes).  This can be a "Stay at Home Order" for non-essential businesses, a capacity restriction, or other possibilities.

Yes, ERC stands for 'Employee Retention Credit', also known as the ERTC 'Employee Retention Tax Credit.  This program was created by the Coronavirus Aid and Relief Act in 2020 to help businesses keep employees on their payroll.  Both Employee Retention Tax Credit (ERTC) and Employee Retention Credits are refundable tax credits.