During the COVID-19 pandemic, Congress passed several programs to financially help companies survive, including the employee retention credit (ERC).
The ERC provides eligible employers with credits per employee based on qualified wages and paid health insurance benefits.
Not-for-profits account for government grants under FASB Accounting Standards Codification Subtopic 958-605. For-profit entities do not have specific guidance in U.S. GAAP regarding ERCs. Instead, they can look to one of these standards for accounting the credits.