April 21, 2022

Medical and Dental Practices Can Still Access Cash Relief from Employee Retention Credit

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Medical practices, dental practices, and hospital-affiliated organizations were all significantly impacted during the pandemic. Those that experienced fully or partially suspended operations due to pandemic-related governmental orders still have the opportunity to access cash relief in a refundable employee payroll tax credit—the Employee Retention Credit (ERC). With credits often exceeding the initial payroll tax liabilities themselves, the ERC has already awarded millions of dollars to a broad spectrum of employers, including medical and dental practices and hospital-affiliated organizations. And unlike PPP and other similar pandemic relief programs, the ERC was never limited by available federal funds, so any business that qualifies and applies can still find ERC relief!

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Launched in March 2020, the ERC remains one of the biggest relief opportunities—up to $26,000 per employee during 2020 and 2021—available to businesses that have been impacted by the COVID-19 pandemic. And even for those businesses already beginning to recover, employers can retroactively claim the ERC based on hardships experienced during 2020 and the first three quarters of 2021.

Employers should also remember: (1) that the ERC is available even if they already received Paycheck Protection Program (PPP) loans, and (2) businesses that started up after February 2020 may qualify under specific ERC provisions that can provide up to $100,000 in refundable credits in 2021.

ERC Eligibility

Employers are typically eligible because government orders restricted their operations.

Commons examples in the medical and dental context include, but are not limited to:

  • Doctors subject to orders preventing them from performing elective procedures.
  • Practices forced to implement mandatory cleaning procedures that reduced operating time.
  • Waiting rooms subject to capacity restrictions.
  • Any practice where hospital access restrictions disrupted its own ability to perform medical procedures.
  • Physical therapy gym settings which were subject to spacing/capacity requirements, which reduced the number of the patients able to be treated each day.
  • Those medical device companies subject to orders preventing them from physically entering premises in order to install and/or service their devices (i.e., robotic surgery equipment).
  • Any practices required to close and later required to re-open subject to restrictions which limited how many patients they could treat.

And the list goes on.

*Note that orders creating qualifying partial suspensions were more common than many employers and tax practitioners realize.

Another way for employers to be eligible is by showing that the business suffered a reduction in gross receipts.

  1. Tax Year 2021 (Quarters 1, 2, and 3):
Employer is eligible if business’s gross receipts are more than 20% down from the gross receipts in the same calendar quarter of 2019.
  1. Tax Year 2020 (Quarters 1 through 4):
Employer is eligible if business’s gross receipts are more than 50% down from the gross receipts in the same calendar quarter of 2019.

Conclusion

Whether or not Congress replenishes other forms of pandemic related relief for medical practices, dental practices, and hospital-affiliated organizations, the ERC remains available now. Numerous government orders restricted a broad range of ordinary business operations in the industry—and you may be one of many employers entitled to substantial cash benefits. If you operate a medical practice, dental practice, or hospital-affiliated organization, don’t wait to find out if you qualify! Contact our team at (410) 497-5947 or schedule your free evaluation with our team here.

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