The Internal Revenue Service urges employers to take advantage of the newly-extended employee retention credit

The Employee Retention Tax Credit (ERTC) program is one of the most misunderstood elements of the pandemic relief package passed by Congress. Your business is likely eligible and should immediately explore the ERTC before funds run out.

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How Much is the ERTC Worth to my Business?

The ERTC can be worth up to $26,000 per W2 employee in your business. ERTC funds are NOT a loan and do NOT have to be repaid. There are no stipulations on how a business may use ERTC funds once received. Though labeled a “tax credit” the ERTC is distributed to the business as a direct payment from the IRS.

How do I qualify for ERTC?

The ERTC is a federal stimulus program designed for businesses that operated during the pandemic and maintained W2 employees. A business may qualify for the ERTC by showing EITHER a requisite drop in gross revenues OR a “greater than nominal impact” due to government mandates and restrictions. A business may receive BOTH the ERTC and PPP funds.

How do I apply for and collect the ERTC?

A detailed analysis of your business will be conducted by tax attorneys specializing in the ERTC. Application documents will be prepared and filed with the IRS. The IRS will take approximately 6-8 months to process your ERTC claim and will mail your credit checks directly to your business.

Who is Eligible to Claim ERC

Reduction in Revenue

Results in credit per quarter affected

1

50% In 2020

If there’s a reduction in your gross receipts in 2020 when comparing to the same quarter in 2019 byt at least 50%

20% In 2021

If there’s a reduction in your gross receipts in 2021 when comparing to the same quarter in 2019 byt at least 20%

Impacted by Government Orders

If a government order had more than a normal impact on your business operations, such as:

2
Required to fully or portially suspend operations tied to governmental orders
Limiting occupancy to provide for social distancing due to governmental orders
Inability to obtain critical goods or materials from supplies because there were required to suspend operations due to governmental orders
Governmental orders to shelter in place preventing employees from going to work

Recovery Start-up Program

If you started a business after February 15, 2020, and had annual gross receipts less than $1,000,000.

3

$1,000,000

Annual Gross Receipts Less Than

FREQUENTLY ASKED QUESTIONS

Yes. While a reduction in revenue is one mechanism of qualifying for the ERTC, it is not the only mechanism. The Nominal Impact Test may also be used, and this test incorporates more qualitative factors such as supply chain disruption related to government mandates.

Yes. Receipt of PPP loans does not disqualify a business from receiving the ERTC. However, all PPP funds that a business did receive, and applied to payroll expenses, must be properly accounted for prior to calculating the ERTC. This step is handled by tax attorneys as part of their detailed analysis of your business.

When a CPA deems a business to “not qualify” for the ERTC, it is almost always due to the CPA’s analysis of the Revenue Reduction Test. CPA’s, broadly speaking, have been less than enthusiastic to analyze businesses under the Nominal Impact Test and have left such analysis to tax attorneys specializing in the ERTC.

No. The ERTC is intended for businesses the operated during the pandemic and maintained W2 employees. Only businesses that are directly related to federal or state government are ineligible. Private businesses from any industry, including non-profits, may qualify.

There are no minimum number of employees required to access the ERTC. However, the maximum number of employees a business may possess is 100 in 2020, and 500 in 2021.

The ERTC has evolved significantly since its inception and this evolution has resulted in confusion and misunderstanding of the program. Without following the details contained in hundreds of pages of the CARES Act, along with subsequent executive orders by both President Trump and President Biden, the opportunity in the ERTC can be easily missed.

No. All of our work is performed on a contingency fee basis and you pay nothing until you receive your ERTC checks from the IRS. In addition, in the unlikely event of a subsequent IRS audit challenging our legal determination of your eligibility, our tax attorneys will provide a full defense of your ERTC claim at no additional fee.
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