The Employee Retention Credit or ERC is a generous stimulus program designed to bolster businesses that were able to retain their employees during the Covid-19 Pandemic by giving them a refundable tax credit check. Some of the benefits from this program include:
Up to $26,000 per employee
No limit on funding (ERC is not a loan)
Flexible use of funds
Available for 2020 & Q1-Q3 2021
The Employee Retention
COVID-19 has been a challenge for all of us. As the world shut down the economy came to a halt, leaving the future of many businesses in a precarious position. As we begin to find normalcy again, businesses now have to focus on recovering and fortunately, several government programs are easing this process.
One such program is the Employee Retention Credit or ERC, which is a generous stimulus program designed to bolster those businesses that were able to retain their employees during this challenging time. Due to the extremely complex tax code and qualifications, it is severely underutilized. Details of the program include:
Self-employed individuals are generally not eligible for the ERC. However, they may be eligible for other relief programs such as the Families First Coronavirus Response Act (FFCRA). The FFCRA is the Self-Employment Tax Credit for the years of 2020/2021 of the Covid-19 Pandemic.
No. This is not a loan. It's a refundable tax credit. When we file your ERC claim we request a refund check for you.
How much do you charge?
Our service charge is based on a percentage of the credit recovered. We calculate and provide our fee with our free analysis. Just like a good CPA, using the right team for this process pays for itself.
Can't I just have my CPA file? Why would I use ERC Specialists?
Of course. The challenge is the ERC credit is taken on your payroll returns and not through your business income tax returns, which is what most CPA's handle. Because of this most CPA's don't process this credit, unless they process your payroll in house. This is also a big reason why this credit is so underutilized. Since CPA's don't typically handle it and they are the tax experts, it has mostly fallen in a middle ground where few are able to effectively process the credit. Interestingly, we receive a large portion of our clients from CPA's.
At ERC Specialists we have decades of payroll experience, which has allowed us to specifically focus to understanding and maximizing the ERC program. In our experience we have found that due to the complexity (the ERC tax code is over 200 pages) and time investment necessary to understand the ERC program, very few are able to effectively maximize this sizeable credit for your business.
Can I get ERC Funds if I already took the PPP?
Yes. The Taxpayer Certainty and Disaster Tax Relief Act of 2020, enacted December 27, 2020, modified the ERC credit rules. One of the modifications included allowing a company to have a PPP loan and still take advantage of the ERC credit. However, you can't use the same dollar for dollar funds. We take this into account when processing your ERC credit.
My revenue went up in 2020, can I still be eligible for the ERC program?
Yes! There are two possible qualifications for 2020: revenue reduction, or a "full or partial shutdown of your business due to COVID-19". Specifically, the IRS describes this as "A government authority required partial or full shutdown of your business during 2020 or 2021. This includes your operations being limited by commerce, inability to travel, or restrictions of group meetings." Below are several examples of events indicating eligibility:
Example 1: A restaurant must close or limit its on-site dining. Such as having to close down every other table, due to COVID-19 restrictions.
Example 2: A business that needs to meet with clients in person and has to cancel meetings due to COVID-19 restrictions.
Example 3: A business has to reduce its operating hours because of COVID-19 restrictions and cleaning requirements.
Example 4: A business had delayed production timelines caused by supply chain disruptions.
Example 5: A business with a planned event has to cancel that event, or restrict the amount of people who can attend due to COVID-19 restrictions.
I'm a CPA or a payroll company, can I refer my clients to ERC Specialists?
This is not a lending program - tax refunds are issued by the US Treasury. Therefore, all eligible employers will receive the funds.
How will I make payment?
We understand your refund check may not arrive for several months (20 weeks minimum according to IRS documentation). Regardless, our fee is covered by our 100% Money Back Guarantee. If the IRS does not release the credit claimed for any reason, we will refund any payments made.
I'm getting more in ERC Credit than I paid in taxes?
Remember that this program is taken according to payroll taxes paid, not on income taxes. ERC funds not applied towards owed payroll taxes are treated as an 'overdeposit' of taxes that will be requested as a refund check from the IRS.
As an owner are my wages, or the wages of any family member I employ, eligible?
Maybe. Wages of owners who have majority ownership, defined as over 50%, are not eligible, nor are the W2 wages of any immediate family members of the owner. In the case an owner has less than 50% ownership, their W2 wages are eligible, as are the W2 wages paid to immediate family members.
Can I be eligible for the ERC if I'm self employed?
1) If you are the majority owner (over 50%) of your company then your wages are not eligible for the ERC. 2) Additionally, if you are a self-employed individual, you are generally not eligible for the ERC. However, you may be eligible for other relief programs such as the Families First Coronavirus Response Act (FFCRA). The FFCRA is the Self-Employment Tax Credit for the years of 2020/2021 of the Covid-19 Pandemic. Click here for more information.
How long does it take to get my ERC Credit?
This is how the process works: you send us the required documents and we process an analysis at no charge. The process from start to finish usually happens in 2-3 weeks. If you wish to move forward, you will select your desired payment option and we file your claim. Once filed, refunds are released based on the IRS backlog. Currently, the IRS has stipulated a 20-week minimum turnaround on the ERC refunds.
Is the ERC Credit taxable?
The ERC credit is not considered income for federal income tax purposes, but you must reduce any deductible wage expenses by the amount of the credit. Please provide the credit information to your CPA for tax purposes.
Do I need to file the ERC credits received on my tax returns?
Yes, the ERC funds will need to be reported on your income tax return. For more information, please refer to this documentation.
Will ERC represent clients in the event they get audited?
ERC Specialists has third-party relationships with Tax Attorney Law firms that will be able to represent our customers if audited by the IRS.
To assist these third-party tax attorney law firms, ERC Specialists have gathered a database of governmental orders to quickly assist our partners for your protection. If a client is audited, ERC Specialists would supply all the documentation to support the ERC filing, including the answers in the questionnaire. Accuracy on this documentation is vital and will support qualification for the credit. Remember, all the documentation we submit to the IRS comes from the company itself. This is why it is crucial for the company to be as honest and thorough as possible in the questionnaire and on their requested documents.
How do I find additional information COVID-19 shutdown orders?
We have compiled a free resource of State and local government shutdown orders. Click here to view the full list.
Helping with ERC does not provide legal or accounting advice. Users of this site should consult with their lawyer and C.P.A. for legal and accounting advice. By providing your phone number, you agree to receive text messages from Helping with ERC. Message and data rates may apply, and message frequency may vary.
*Please be advised that the database of shutdown orders provided by ERC Specialists, LLC is intended for convenience and referential purposes only and should not be relied upon as a legal or comprehensive list of all shutdown or other orders that may have been in place during 2020 and 2021 related to COVID-19 nor their impact upon any particular company. It is not intended to provide legal or tax advice and is provided for purely informational and educational purposes. Please be aware that nothing contained herein should be construed as legal or tax advice. If you have any questions regarding the meaning or interpretation of the orders contained within the database, we strongly encourage you to seek the advice of a licensed attorney or certified public accountant in your area. ERC Specialists, LLC disclaims any and all warranties related to this database to the fullest extent allowed by law. ERC Specialists, LLC. makes no representations or warranties of any kind, whether express or implied, as to the accuracy, completeness, timeliness, reliability, suitability, or availability of the information contained within the database.