The Employee Retention Credit (ERC) is a fully refundable tax credit that eligible employers, who have been able to keep their employees on the payroll, are able to claim for Q2-Q4 of 2020 & Q1-Q3 of 2021.
The credit has provided fast and direct economic assistance for workers, families, and small businesses to help preserve jobs within American industries.
(1) GROSS RECEIPTS
When compared to 2019,
2020 - 50% Reduction in Gross Receipts
2021 - 20% Reduction in Gross Receipts
(2) GOVERNMENT SHUTDOWN
A business that has been affected by a government shutdown that has resulted in limited operations or business interruptions.
For example: (1) A partial shutdown, (2) A disruption in your business, (3) An inability to access equipment, (4) Having limited capacity, (5) Shutdowns of supply chains or vendors, (6) Reduction in services offered, (7) Reduction in hours to accommodate sanitation, (8) Shutdown of some locations and not others, and (9) Shutdowns of some members of a business.
FREQUENTLY ASKED QUESTIONS
from prospective clients
I GOT A PPP LOAN, CAN I STILL CLAIM THE CREDIT?
Congress actually removed such limitations in the Consolidated Appropriations Act (CAA) of 2021. All businesses that received a PPP loan can also qualify the ERC.
I DIDN'T HAVE A 50%+ DROP IN GROSS RECEIPTS, CAN I QUALIFY IN OTHER WAYS?
This requirement was only for 2020 quarters. For quarters in 2021, the business only had to have a 20% decrease. Additionally, you could still qualify in 2020 under the "Government Shutdown" test.
DO I ONLY QUALIFY IF I FIT BOTH QUALIFICATIONS?
Not only do you need to meet only one of the two qualifying categories, but each quarter is looked at individually. This is very important for businesses as it can allow for more quarters to receive benefit. For example, Q2 2020 can qualify under the "Gross Receipts" test and Q3 2020 can qualify under the "Government Shutdown" test.
MY BUSINESS WASN'T FULLY SHUTDOWN DURING THE PANDEMIC, CAN I STILL CLAIM THE CREDIT?
Even a partial suspension order by the government (federal, state, or local) of your business could qualify. As mentioned above: a partial shutdown, a disruption in your business, an inability to access equipment, having limited capacity, shutdowns of supply chains or vendors, reduction in services offered, reduction in hours to accommodate sanitation, shutdown of some locations and not others, and shutdowns of some members of a business are all scenarios that still potentially qualify your business.
The key factor is: Due to a government-ordered suspension is/was your business not able to continue its activities in a comparable manner? And, did that result in a more than nominal impact on their business operations?
MY BUSINESS WAS DEEMED AN ESSENTIAL BUSINESS, WHAT ARE MY OPTIONS?
An impact to or change in your business can still qualify you for the ERC. For example, if you were open but your vendors were closed or you couldn’t go to their client’s job site, you may still qualify. Alternatively, if part of your business was considered non-essential and was impacted by a government-ordered suspension, that may also qualify the business.
MY BUSINESS IS A CHARITY, CAN I CLAIM THE CREDIT?
The ERC is available to charities as well as churches, nonprofit hospitals, museums, and more.
MY BUSINESS HAS GROWN SINCE THE START OF THE PANDEMIC, DOES THAT AFFECT MY ELIGIBILITY?
A company can absolutely still apply for the ERC regardless of how well it has done since the start of 2020. Again, your business can still qualify under the "Government Shutdown" test. Ultimately, the government is considering the fact that businesses could have been even more successful had the pandemic never occurred.
HOW WE CAN HELP YOUR BUSINESS
We will work to determine your company’s eligibility based on full or partial suspension OR through your gross receipts.
We will work to determine your company’s eligibility even if you’re an essential business or did not see a decrease in review.
We will review your required payroll information and PPP wages.
We will work to determine your credit availability and deliver an audit ready package.
We will look for other credit opportunities to maximize potential savings.