April 4, 2022

Theaters, Arts, and Live Venues May Still Find Cash Relief from Employee Retention Credit

Download article

The arts industry was one of the first industries to suffer during the pandemic—and one of the hardest hit. Many venues—including movie theaters, concert halls, and stadiums—initially closed due to governmental orders, only to reopen subject to suffocating capacity restrictions and social distancing procedures. Unfortunately, many arts organizations, including non-profits, incorrectly believe that they are ineligible for the very real opportunity to access significant cash relief in a refundable employee payroll tax credit—the Employee Retention Credit (ERC).

Have Questions? Call us for Your consultation.

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 those in the arts industry. And unlike the Paycheck Protection Program (PPP) loans and Shuttered Venue Operator Grants, the ERC was never limited by available federal funds, so any business that qualifies and applies can still find ERC relief! 

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 negatively 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 or Shuttered Venue Operator Grants, 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

One way for employers in the arts industry to establish ERC eligibility 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.

Employers in the arts industry may also be eligible due to government orders that restricted their operations. 

Commons examples include, but are not limited to:

  • Restrictions on public gatherings 
  • Capacity limitations applicable to public and private spaces which caused cancellations of a variety of pre-planned events
  • A state or local order requiring employees to work remotely

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

Conclusion

Whether or not Congress replenishes other forms of pandemic-related relief for those businesses in the arts industry, 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 business in the arts industry, 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.

Footnotes

go to All news articles