Businesses around the country have suffered irreparable harm due to the ongoing pandemic. Since March 2020, businesses have been plagued by the pandemic and sales are just now starting to turnaround for some. Sadly, many businesses were either shut out of the Paycheck Protection Program (PPP) loans and/or Restaurant Revitalization Fund (RRF). Funding that was needed in order to keep the lights on ultimately never came. The end result? Many businesses have had to close their doors permanently.
Funds for both programs above were depleted in record time. Many well-resourced companies (corporations) were able to, with the help of their bankers, muscle their way to the front of the line, at the expense of smaller, more vulnerable businesses. While the news is unfortunate, business owners must find a way forward and continue to fight the good fight. Survival, from the beginning, has been one of the most pressing line items on everyone's agenda.
Although it is not often publicized, the IRS has been accepting applications for The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) Employee Retention Tax Credit (ERTC) which is specifically earmarked for small businesses. Businesses that applied for and received PPP monies can also claim ERC credits.
The ERC is wildly lucrative credit that refunds a percentage of wages paid in each quarter that a business has qualified. Worth up to $26k/employee on payroll, this is a tax credit that everyone should take advantage of. For many, the ERC sometimes turns out to be more beneficial than the PPP program. Pair this with the fact that there are no restrictions on the use of funds and it is a no-brainer as to why employers need to claim this cash refund that is rightfully owed to their enterprise. Contrary to popular belief, ERC credits are not a deferral. The credits are paid to an employer in the form of a check directly from the IRS. This is not a loan that has to be paid back.
Credits are available to business entities, startups, and non-profit organizations. In other words, any business structure with five or more W-2 employees in 2020-2021 can potentially qualify. Businesses forced to temporarily or permanently close during this window of time automatically qualify. For example, in many states, restaurants/bars were forced to operate at a reduced capacity. This is one of many examples of what would qualify an employer for the ERC.
Businesses can claim their tax credit as they would with any other tax credit by asserting to the IRS that they can legally claim the credit. While the IRS is a slow paymaster, the money is guaranteed as it is back by the U.S. Department of the Treasury. As of today, the standard turnaround time to see ERC cash refunds hovers around the 9–12-month mark.
ERT Credit has calculated the ERC credit for thousands of employers across the country and continues to actively process both computations and amended returns for employers. We can answer your questions and assist you with the employer retention credit, CARES Act, tax consulting, and filing options. Do not hesitate — contact us to make sure you receive all credits your business qualifies for. Click here to reach out to us for more information.