As businesses and practices of all sizes became directly or indirectly affected by regulations and shutdowns caused by the COVID-19 pandemic and the resulting economic downturn, it became clear that U.S. companies needed significant financial assistance to remain open.
What is the Employee Retention Tax Credit?
The US government authorized billions of dollars in aid specifically for businesses through the Employee Retention Credit (ERC) within the CARES Act. A refundable employment tax credit for eligible employers based on qualified wages and health plan expenses, the ERC allowed employers to use the funds to continue to pay existing employees and keep business running and staff working during the economic fallout caused by the Coronavirus.
Employers have been working hard to stay open and running during the pandemic. They simply don’t have the time, energy or ability to manage constantly changing business operations environments, keep up with local, state and federal regulations and understand enough of the ERC to see if they are eligible. There are millions of unclaimed dollars available and nearly any company or healthcare practice impacted by the pandemic is eligible to claim their credit.
Businesses need to take advantage of this opportunity before funds run out, or the three-year claims window closes.
5 Reasons to Apply For the Employee Tax Credit
Most Businesses Qualify
The COVID-19 related criteria a business must meet to qualify for the ERC are:
- The business was fully or partially shutdown or had to reduce hours due to a government order.
- The business saw a significant decrease in gross receipts in 2020 or 2021 when compared to 2019 gross receipts
- The business is a recovery startup, operational in the third and fourth quarters of 2021.
Receive Up To $26,000 Per Employee
When first introduced as part of the CARES Act in 2020, the maximum credit allowable under the ERC was $5,000 per employee. With its renewal and expansion in 2021, the maximum credit increased to $21,000. When the ERC and the Paycheck Protection Program (PPP) were rolled out under the CARES Act, businesses had to choose which to use. Many selected PPP because it was easier to sign up for a Small Business Administration-backed loan than to learn the details of eligibility for ERC. Subsequent legislation expanded the eligibility requirements for employers so that they could now receive both, making this a can’t-miss opportunity for businesses.
It’s Retroactive
Even though the Infrastructure Investment and Jobs Act (IIJA) of 2021 moved up the ERC’s expiration date, effectively repealing the program for the fourth quarter of 2021, companies are still allowed to submit their payroll tax filings for the covered periods. Employers who filed their payroll taxes in 2020 were able to deduct the money directly from their quarterly payroll taxes at that time. Those who didn’t file in 2020 or who are claiming the ERC for the first time on their payroll taxes in 2021 will be refunded for quarterly filed periods.
It’s A Cash Refund
Though the Infrastructure Investment and Jobs Act (IIJA) of 2021 moved up the ERC’s expiration date, effectively repealing the program for the fourth quarter of 2021, companies are still allowed to submit their payroll tax filings for the covered periods. Employers who filed their payroll taxes in 2020 were able to deduct the money directly from their quarterly payroll taxes at that time. Those who didn’t file in 2020 or who are claiming the ERC for the first time on their payroll taxes in 2021 will be refunded for quarterly filed periods.
It’s Easier Than You Think
If you would like to find out if your company qualifies for the ERC, it is as easy as filling out a questionnaire that will determine your eligibility. You can go directly to the questionnaire by clicking here. There is no cost or obligation to determine your eligibility. If you indeed to qualify, ERC Specialists will help you to determine what your credit will be and will do the work in filing for the credit for you, if you desire.
Why This is Important For Your Business
I have had many of my clients who found out, in this way, that they do indeed qualify for the ERC. Some had been told previously by their CPA that they did not qualify.
If your business, or medical or dental practice, was impacted by COVID-19, even if you received the PPP or EIDL loan. I would highly recommend taking the time to determine, for certain, whether or not you qualify for this tax credit.
If I can be of any help in the process, or can answer questions on the ERC or any other cash flow related items, please schedule a time to talk with me using the link below.
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