During the epidemic, an economic collapse severely hit medical practices, dental practices, and hospital-affiliated groups. Those who had their activities interrupted due to pandemic-related governmental directives still have the option of receiving monetary relief. This can be in the form of a refundable employee payroll tax credit known as the Employee Retention Tax Credit. The ERTC is a cash refund via payroll tax that has been made available to medical and dental practices. It also includes privately-owned practices. This short guide will show you how to receive ERTC funds for both medical and dental practices.
The focus of the ERTC is on practices that have been negatively impacted by the imposition of lockdowns that took place globally and halted office activities. As a result, this prevented access to hospitals and restricted the ability of professionals who performed elective procedures that are not crucial or have experienced steep declines in their incomes.
Many businesses are fully acquainted with the ERTC, but there is still uncertainty about the criteria and application processes. The ERTC incentivizes and credits companies that keep their employees on the payroll. This is true even though they are not working during a covered time owing to COVID-19. It is a refundable tax credit against certain employment taxes. It applies to a percentage of qualifying earnings paid to employees by an eligible employer.
ERTC Funds for Medical and Dental Practices, who qualifies?
Employers can qualify if they have a complete or partial suspension of their activities. This suspension can be owing to directives from an authorized governmental entity. Or it can also be due to if their gross receipts have decreased, as indicated further below.
Almost every state government has implemented a moratorium on elective procedures. This may result in certain healthcare providers qualifying for the ERTC even if they don’t achieve the gross revenue decrease. Other eligible examples include reduced patient visits. The cause can be owing to capacity constraints or the closure of an office to comply with sanitary standards. Healthcare providers who believe they may have been partially affected due to COVID-19 should carefully assess their ERTC eligibility.
Examples of medical, dental, and hospital-affiliated groups that have qualified:
- A medical practice with waiting room capacity limits
- A medical device business whose technicians were barred from visiting a hospital because of COVID directives
- A practice in which hospital access limitations prevented certain medical operations from being performed
- A physical treatment clinic with rigorous spacing rules, limiting the number of patients who might be seen in a day
- A medical practice whose doctors were prohibited by COVID directives from performing elective treatments
- Dental or medical offices that were forced to close owing to COVID regulations and later reopened with limits on the number of patients they may treat
How To Get The Employee Retention Credit
If you own a medical or dental practice that underwent full or partial suspension of operations because of lockdown restriction due to COVID-19, you can qualify as an Eligible Employer for ERTC purposes.
In the first, second, and third quarters of 2021, if the business’s gross revenues are more than 20% lower than the organization’s gross receipts in the comparable calendar quarter of 2019, the organization will qualify as an Eligible Employer. The gross revenue reduction criteria for 2020 are more difficult to satisfy because a higher than 50% fall is required.
Medical or dental offices with 100 or fewer full-time employees are entitled to the maximum benefits available under the ERTC calculations for the 2020 ERTC if they continue to be Eligible Employers under either the Government Mandate Test or the Gross Receipts Test. For the 2021 ERTCs, the Government relaxed this restriction by raising the full-time employee level to 500 or less.
Credit Rates
- 2020 Credit: 50% of eligible salary, plus employer-paid healthcare, paid to each employee. Wages for qualified employees are limited to $10,000 per employee
- 2021 Credits: For the first, second, and third calendar quarters, each employee receives 70% of eligible salaries, including employer-paid healthcare. Wages for qualified employees are limited to $10,000 each quart
The Interaction with PPP Loans
Businesses that have obtained Paycheck Protection Program loans are also eligible for the ERTC. When the ERTC was initially permitted as part of the CARES Act, entities who received PPP funds were legally barred from claiming an ERTC. Later, when the ERTC was expanded and improved as part of the Consolidated Appropriations Act in December 2020, the legislative limitation on PPP participants collecting ERTC benefits was lifted.
So, even if they obtained PPP financing, all medical and dental practices, including those controlled by private equity, should reconsider their eligibility for ERTC. Because of the large number of government directives limiting routine activity in 2020 and 2021, several firms are obtaining significant monetary advantages in addition to PPP incentives.
Conclusion
It is extremely challenging to use the Employee Retention Tax Credit to earn the maximum advantage you may be qualified for, especially since “proper government authority” extends to state and local government directives. Consult with TPG to discover whether you are eligible for a credit and for how much. This is especially critical if you took out a Paycheck Protection Program loan since, while Congress extended eligibility for the Employee Retention Tax Credit to PPP borrowers, they also placed safeguards in place to prevent double-dipping.
Again, given the intricacy of these two programs, medical and dental practices must work with a good financial advisor to properly utilize the tax credit. So, contact us now to see how TPG can help maximize the assistance for your business.
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