The Employee Retention Credit (ERC) is a little-known refundable payroll tax credit that is worth up to $26,000 per employee that was on payroll during 2020/2021. There are scores of employers around the country that have yet to tap into the covid-19 relief. Some employers simply do not know that the incentive exists. Whereas others have prematurely determined that they do not qualify for the credit based on outdated guidelines that no longer apply to their enterprise. Whatever the case, there is a good chance that your business qualifies for the ERC if it was impacted in a negative way due to the pandemic.
Employers, including organizations that are tax-exempt, are eligible for the credit if they were in operation during the calendar year 2020 and experienced either:
- partial/full shutdown due to government mandates and restrictions
- supply chain interruptions and delays
- inability to work with vendors either domestically or internationally
- capacity limitations due to social distancing (i.e., restaurants operating at 50%)
- a drop in product or service output due to the pandemic (i.e., manufacturers' throughput diminished)
- reduced hours of operation due to government mandate
- required sanitation/cleaning protocol due to government mandate
The above line items are just the tip of the iceberg. There are other ways to qualify for the ERC. Get in touch with a specialist by clicking here.
Another common theme ERT Credit has run into is an enterprise's CPA signalling to leadership that they do not qualify for the ERC. While this may be the case in some instances, ERT Credit has often found that outdated guidelines were being used to reach the aforementioned verdict. In extreme cases, ERT Credit has witnessed employers being told that they do not qualify with no supporting information to back up the claim. Upon getting involved, ERT Credit is often able to not only establish eligibility but compute credits that tend to be mid-6 figures if not larger.
For example, ERT Credit was contacted by leadership at a prominent seafood restaurant located in SoCal. The restaurant was told that they were not able to qualify for the ERC due to not suffering from a partial disruption and a decline in gross receipts. IRS guidelines indicate that an eligible employer has to either experience a partial disruption or a decline in gross receipts, not both. After engaging ERT Credit, the restaurant was determined to have qualified for the credit from mid-March 2020 through June 2021 based on capacity restrictions. To sweeten the deal, the establishment also suffered a 20% decline in gross receipts when comparing Q3 2021 to Q3 2019; this made the entire third quarter qualified for the ERC. ERT Credit paved the way for the establishment to walk away with an impressive $745,580.26 in credit. A 60-second introductory phone call from leadership at the seafood restaurant allowed them to receive a 3/4 million dollar cash refund.
ERT Credit has calculated the ERC credit for hundreds of employers across the country and continues to actively process both computations and amended returns for employers. Click here to reach out to us for more information.