The Employee Retention Credit has once again come to the forefront. This time, lumber yards are finding out that they are prime candidates for this special tax credit that materialized during the earlier months of the pandemic in 2020. Lumber yards nationwide were impacted by the pandemic almost immediately. Whether the lumber yard experienced a significant supply limitation on seasonal lumber, vendors that lumber yards worked with experienced extreme challenges operating, or the cost of building materials increased double, or in some cases, triple digits, lumber yards were hit hard. Given these severe impacts, lumber yards are ripe when it comes to receiving the Employee Retention Credit.
Qualifying for the Tax Credit
Outside of qualifying for the credit based on a disruption to an employer's supply chain, there are two additional criteria that can draw a clear line to eligibility. Establishing a direct path to eligibility for the ERC has been anything but simple. Employers, including organizations that are tax-exempt, can qualify for the credit if they experienced a partial/full shutdown due to government mandates or experienced a 50% decline in gross sales in any quarter in 2020 compared to the same quarter in 2019. For 2021, an employer would need to have experienced a 20% decline in gross sales in any quarter in the year compared to the same quarter in 2019. Employers do not need to experience both a partial/full shutdown and a decline in gross sales to qualify for the ERC.
Other common misconceptions include:
- we are an essential business, so we are not eligible
- we did not shut down our office, so we are not eligible
- our operations were suspended, but we were profitable, so we are not eligible
- we were told we needed a decline in gross receipts, and our capacity must have been reduced
A Unique Position
Lumber yards are in an interesting position due to the catastrophic impact covid-19 has had on the industry. While many lumber yards are in the black, the pandemic has caused obvious opportunity loss. Products and materials skyrocketed in price in what seemed to be overnight. Moreover, there was a myriad of key products that were simply not available for extended durations of time. This series of unfortunate events made it to where prices had to be raised in order to not only accommodate an increase in the cost of goods but to keep the lights on and staff employed. These are all reasons why the Employee Retention Credit fits the bill so well. The impact was far too great, and with this, lumber yards have landed in a position that aligns them well with taking advantage of this wildly lucrative tax credit.
Most lumber yards qualify for the Employee Retention Credit. Supply chain disruptions, loss in revenue, retaining staff, adhering to capacity restrictions mandated by the state, and having to pivot left and right when it comes to operating are just some of the variables that make this tax credit a reality for lumber yards. While not all lumber yards will qualify, employers should reach out to ERT Credit to get an accurate determination. ERT Credit takes a conservative approach to eligibility and will only move on computing said credit if there is a clear line to eligibility.
How to Proceed
In practice, ERT Credit has found that an extremely diverse range of businesses are excellent candidates for the ERC. For many business owners and managers of non-profits, the ERC remains the go-to relief as it relates to the pandemic and one of the last sources of a cash injection that is helping businesses stay afloat. Yet hundreds of thousands of businesses and non-profit organizations around the country are failing to take advantage of the ERC. Billions of dollars are available for businesses and non-profit organizations to both retain and hire new employees. But you must apply.
As leaders in the market, ERT Credit has provided maximized computations to over one thousand employers across the country. See how ERT Credit can help you today by clicking here. No risk, no obligation - pay when you get paid.