Can I still apply for the ERC?
Businesses can still apply for the ERC by filing an amended for the quarters during which the company was an Eligible Employer.
Most Frequently Asked
Questions about the ERC
What is the ERC (Employee Retention Tax Credit)?
Is a refundable credit that businesses can claim on qualified wages, including certain health insurance costs, paid to employees? This credit provides tax relief for companies that lost revenue in 2020 and 2021 due to COVID-19.
Why am I getting this credit?
This is a government refund/reward for keeping your employees on payroll during COVID down time (full/partial shutdown or lost revenue).
Who qualifies for the ERC?
If an employer had a significant decline in revenues or had to fully or partially suspend business operations due to government orders, they qualify for ERC:
Significant decline in revenue is defined as:
- For 2020 – a 50% decline in revenues in any quarter compared to the same quarter in 2019.
- For 2021 – a 20% decline in revenues in any quarter compared to the same quarter in 2019.
- ERC ends when quarterly revenue in 2020 exceeds 80% for the same quarter in 2019.
If an employer does not meet the revenue threshold, they may still qualify if they experienced either a partial or full shut-down of business operations.
Give an example of Partial and Full Shut Down?
- Partial shutdown example – in-door dining was not allowed at a restaurant, but take-out was available.
- Full shutdown example – under the CA stay at home order, child day care centers were completely closed.
What Are ERC qualified wages?
ERC credits are calculated based on the qualifying wages paid to employees during eligible employer status. For most companies taking advantage of this program, the refundable tax credits are well in excess of the payroll taxes paid by the employers. ERC benefits can be larger than the amounts a company received in PPP funding.
How much will the refund be?
The refund is based on the number of W-2 employees, Health Benefits and how the partial shutdown affected your business.
How Does PPP Impact ERTC?
When first launched, the original rules stated that you could NOT get both a PPP loan and claim the ERTC. For most employers, the PPP was a better option to get forgivable money to use for payroll and other expenses.
Today, the law now allows employers who received Paycheck Protection Program (PPP) loans to claim the ERTC.
Can I still apply for the Employee Retention Credit?
Yes. The statute of limitations for the 2020 ERC does not close until April 15, 2024. The statute of limitations for the 2021 ERCs does not close until April 15, 2025.
What is the source of the refund?
The refund is from the payroll taxes and refunded directly by the IRS.
Is this legitimate legislation?
The PPP loan program and employee retention credit (ERC) were created by Congress to help employers affected by the Covid-19 Pandemic:
Employers are now allowed to access both PPP and ERC
The ERC is a refundable payroll tax credit Up to $5,000 per employee for 2020 Up to $26,000 per employee for 2021.
- 50% of up to $10,000 qualified wages per year for full-time employees •Max credit of $5,000 per employee
- Wages total cannot include those paid by forgiven PPP loan proceed
- 70% of up to $10,000 qualified wages per quarter for all 2021 quarters.
- Max credit of $26,000 per employee.