Employee Retention Credit FAQ
Welcome to our Frequently Asked Questions page for the ERC / ERTC Covid Relief Program. For your convenience we have provided answer to the most common questions we see regarding the Employee Retention Tax Credit program... and the good news is that our answers are in easy to understand bite sized snippets.
Disclaimer: I’m not an accountant. This article is for informational purposes only. It does not constitute accounting advice and should not be construed as such. For accounting assistance with your ERTC application you should fill in the "Apply For ERC Relief" form on our home page to receive your Free ERC eligibility assessment. That will begin the process where the ERC accounting professionals can assess your eligibility and tell you the amount of ERC credit you should expect to receive.
Since you are on this page it is safe to assume that you have realised how complicated it is to complete the application yourself and how hard it is to find an accounting company who knows enough about the ERTC program that you can trust them to accurately complete your application. Many clients report that their CPA or bookkeeper is not willing to complete their ERC application as it is not something they know enough about. Worse still, some clients were assured by their CPA that they did not qualify and yet our ERC experts were able to get them the credits they were owed.
Our specialist accounting partners are experts when it comes to the Employee Retention Credit program and they will happily provide you with a Free ERC eligibility assessment so that you will know exactly how much you will qualify for. As soon as you find the answers you were looking for, take just a few minutes to fill in the form on our home page and get your assessment started.
Frequently Asked Questions
What Is The Employee Retention Credit Program (ERC)?
The “Employee Retention Tax Credit” (ERTC) program, otherwise known as “Employee Retention Credit” (ERC), was introduced by the CARES Act to provide financial relief to businesses in the United States that have been impacted by COVID-19 and the associated government restrictions on trade. This was amended and expanded when the American Rescue Plan Act was signed on March 11 in 2021.
The business support is provided in the form of refundable tax credits which were designed to incentivize employers to retain employees on their payroll during the pandemic. Even though they are called "Tax Credits" you can receive your credits as a tax refund check from the Treasury. However, if you owe back taxes the credits will first be used to pay off your tax debt with any remaining credits being payable to you via check.
We Have Been Told That The ERTC Program Has Finished... Can You Prove That It Is Still Available?
Unfortunately, there is a lot of misinformation surrounding the ERTC, especially in relation to eligibility and availability. We often have clients come back to tell us that they have been told that it is no longer available, or that they are not eligible. In fact, some pages on the IRS website have not been updated and still say that the ERTC has finished!
We have included a link below which will take you to the IRS website where you can see first hand that this program is in fact still available. This IRS webpage compares the current status of 2020 versus 2021 eligibility criteria. Look under the table and you will see that this was last revised on “08-Mar-2022” so you can be assured that this document is current.
We are experts when it comes to the ERTC. Our accounting team knows all the latest developments relating to the revised ERTC program. This is why you should listen to us rather than someone who does not do this full time. Our team keeps up to date with all of the intricacies and ongoing changes that apply to this complex Covid relief program. It is all they do.
You Can Access The IRS Webpage At:
https://www.irs.gov/newsroom/employee-retention-credit-2020-vs-2021-comparison-chart
Please do not rule yourself out when you review this chart. The eligibility criteria is complex and our team has secured payments for many businesses who did not think they qualified... Let our team of experts assess your eligibility.
How Much Is The ERC Covid Relief Package Worth Per Employee?
Employee Retention Credit 2020
The ERC 2020 Program is a refundable tax credit of 50% of up to $10,000 in wages paid per employee between March 12th 2020 and December 31 2020 by an eligible employer. That is $5,000 per employee ($10,000 x 50% = $5,000).
Example: If an employee was only paid $7,000 it would be $3,500 ($7,000 x 50% = $3,500)
Employee Retention Credit 2021
In 2021 the program increased to 70% of up to $10,000 in wages paid per employee per quarter for Q1, Q2, and Q3 2021. That is a potential of up to $21,000 per employee ($10,000 x 70%) = $7,000 x 3 quarters.
That Is Up To $26,000 Per Employee If You Combine both 2020 and 2021
As you can see, this can start to add up very quickly... How many employees did you have?
ERC Calculations
The actual calculations to complete your ERC application are complex, so if want an accurate assessment of the value of your relief payment please fill in the "Apply for ERC Relief” application form on our home page to have one of the ERC Expert accountants provide you with a Free Assessment.
Examples Of ERC Credits Received
You will see some examples of client’s credits on our website. Note that when it says that they received $50,000 for 2020 that means that the amount received was ONLY for the 2020 portion of their claim and not the total for both 2020 and 2021.
Started A New Business?
Note: If you started a business during this period you need to read the FAQ below titled “Recovery Startup Businesses” as different calculations apply to you.
What Is The CARES Act?
The CARES Act is the "Coronavirus Aid, Relief, and Economic Security" Act which was a $2.2 trillion economic stimulus bill that was signed into law on March 27, 2020. The bill was introduced in response the the financial distress caused to United States families and businesses as a result of the Coronavirus (Covid-19) pandemic. The CARES Act was responsible for the creation of the Paycheck Protection Program (PPP) loan scheme which was part of the government's Covid relief package that assisted many businesses until it finished on May 31, 2021. The CARES Act also created the Employee Retention Tax Credit (ERTC) program which is currently available.
ERTC Accounting Team Success Stories. Employee Retention Tax Credits Received
Mexican Restaurant
$ 2,100,000
Car Dealer
$209,000
Dentist
$599,891.59 for 2020
Eligibility Criteria - Who Qualifies For The Employee Retention Tax Credit?
What Are The Minimum Eligibility Requirements For ERC?
To be eligible to receive ERC you must:
1 - Issue W-2s and file Form 941s
2 - Meet the following criteria regarding the number of W-2 employees you employed
Requirements for employee retention credit 2020
Must have fewer than 100 Full Time W-2 Employees. You can have unlimited Part-Time W-2 employees.
AND / OR
Requirements for employee retention credit 2021
Must have fewer than 500 Full Time W-2 employees in 2019. You can have unlimited Part-Time W-2 employees.
3 - AND you must meet the following "Economic Impact Criteria"
Either
Your business has experienced a Full or Partial Government shutdown – This can be a “Stay at home” mandate, or government ordered capacity restriction. IMPORTANT: If this criteria is met then sales can be the same or even more without impacting eligibility.
OR
Your business had a reduction in sales that meets the following criteria:
For 2020 ERC period sales for a calendar quarter are down 50% when compared to the same quarter of 2019
For 2021 ERC period sales for a calendar quarter are down 20% when compared to the same quarter of 2019
IMPORTANT - Please see the "Recovery Startup Business" section below if you started a business on or after February 15th 2020
Recovery Startup Business - I Started A New Business On Or After February 15th 2020, Do I Qualify?
If your business can't qualify using the “shut-down” or “revenue decline” criteria, and you started your business on or after Feb 15th, 2020, there is another special qualification option available to you under the “ERC Recovery Startup Business” program.
Here is the criteria for eligibility for this option:
To be eligible to receive ERC as a Recovery Startup Business you must:
1 - Have more than 1 employee (IRS rules)
2 - Have started operations on or after Feb 15, 2020
3 - Have gross receipts under $1 million dollars for each of 2020 and 2021
4 - Not be eligible for ERC under the other requirements, i.e. a significant decline in gross receipts or subject to governmental imposed orders/restrictions.
5- Have paid employees during Q3 and Q4 of 2021.
Note: If you own multiple companies or have common ownership, the requirements change. These businesses will typically get "lumped together" under what the IRS calls attribution rules.
How much Can A Recovery StartUp Business Receive?
You can receive up to a maximum of $100,000.
This is calculated based on a credit of up to $7,000 per employee per quarter, up to a maximum of $50,000 per quarter for all employees, for each of Q3 and Q4 of 2021.
Use the ERC eligibility assessment form on our home page to find out for free if you qualify.
My CPA / Payroll Company Said I Do Not Qualify
Our accounting partners have secured payments for businesses that have been told they did not qualify. If you meet the ERTC eligibility criteria outlined above we encourage you to fill in the form and get a second opinion. This is what our ERC Expert accountants specialize in. You definitely don't want to miss out, and it is free to find out for sure! Apply using the ERC eligibility assessment form on our home page.
Can I Claim ERTC If I Own Multiple Businesses?
Separate businesses under common ownership must be evaluated together. Many different factors must be assessed to see if they are eligible for ERTC. Everyone’s circumstances are different. Some multi-business owners have received large payments due to the ownership structure of the group of businesses. It is recommended that you do not rule yourself out due to the group of businesses exceeding the full-time employee limits. If eligible, the ERC is then calculated and filed for each business separately. Apply today using the ERC eligibility assessment form on our home page and let us get started on your assessment.
I Closed My Business. Can I Still Receive ERC Relief?
Yes, you could be eligible to receive ERC relief for the time you were in business during the qualifying period provided you meet the other eligibility requirements. You should apply using the Free ERC eligibility assessment form on our home page to see how much you are entitled to receive.
What About ERTC For Non-profits?
Many non-profits have been told that they do not qualify, however, ERTC relief has been obtained for non-profits by our accounting team. A non-profit spends a lot of time raising much needed funds so why miss out on the potential to receive ERC Funds. Find out what you are entitled to. Apply today using the Free ERC eligibility assessment form on our home page.
What About ERTC For Churches?
ERTC relief has been obtained for churches. For example, our accounting partners obtained $30,782.22 for a church with 12 employees. It would take a fair few fundraisers and cake stalls to make that kind of money. Don't miss out on what you are entitled to. Apply today using the Free ERC eligibility assessment form on our home page.
Help out your church and let them know that they could qualify for ERC Covid Relief funds and that it won't cost them anything to find out for sure.
Employee Retention Credit And PPP - What If I Received A PPP Loan?
One of the most frequent questions is "Can I claim ERTC and PPP?" Businesses that received PPP loans are now eligible to receive ERC funds. Conditions apply. Many businesses that receive ERTC also received PPP.
The IRS states "Under section 206(c) of the Taxpayer Certainty and Disaster Tax Relief Act of 2020, an employer that is eligible for the employee retention credit (ERC) can claim the ERC even if the employer has received a Small Business Interruption Loan under the Paycheck Protection Program (PPP)" - Dated Nov 9, 2021
Below is an extract from IR-2021-48, dated March 1, 2021
"WASHINGTON — The Internal Revenue Service today issued guidance for employers claiming the employee retention credit under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), as modified by the Taxpayer Certainty and Disaster Tax Relief Act of 2020 (Relief Act)...
The IRS states in "IR-2021-48" dated March 1, 2021 that "A significant change for 2020 made by the Relief Act permits eligible employers that received a Paycheck Protection Program (PPP) loan to claim the employee retention credit, although the same wages cannot be counted both for seeking forgiveness of the PPP loan and calculating the employee retention credit."
You Can Read The Original Document At:
Do not rule yourself ineligible, let our accountants calculate this for you.
Many of our clients have been receiving ERTC even if they received the PPP. Don't miss out because someone else told you that you do not qualify. Fill in the ERC eligibility assessment form on our home page to find out for sure and to discover how much you could receive.
What If I Use A Reporting Agent, Payroll Service Provider, PEO, CPEO, or 3504 Agent?
Staffing Agencies using a third-party to report and pay employment taxes can qualify for the ERTC. Below is an extract taken from Section 2301 of the Coronavirus Aid, Relief, and Economic Security Act, Notice 2021-20
Page 93, Question 62: Can an eligible common law employer that uses a third-party to report and pay employment taxes to the IRS get the employee retention credit?
Answer 62: Yes. If a common law employer is otherwise eligible to receive the employee retention credit, it is entitled to the credit, regardless of whether it uses a third-party payer (such as a reporting agent, payroll service provider, PEO, CPEO, or 3504 agent) to report and pay its federal employment taxes.
The third-party payer is not entitled to the employee retention credit with respect to the wages it remits on the common law employer's behalf (regardless of whether the third-party is considered an "employer" for other purposes of the Code).
You Can Access The Original Document At:
ERTC Accounting Team Success Stories...
Employee Retention Tax Credits Received
Japanese Restaurant
$100,000
Assisted Living Facility
$144,000
Chinese Restaurant
$125,000
ERTC - General Questions
Is The ERTC A Loan?
The ERTC is a government relief payment in the form of a tax credit. It is not a loan. Therefore, there is no requirement to repay these tax credits. The exception is if you already claimed tax credits for Q4 2021. This is because the Infrastructure and Investment Jobs Act made changes to the ERTC so that it no longer includes Q4 2021. In this instance you would have to repay any payments you received for Q4 as it no longer qualifies under the ERC relief program.
Is There A Limit On How Much A Business Can Receive?
No. There is no dollar limit on the amount a business can receive. We have seen clients qualify for millions of dollars. As a quick example, we had a Mexican Restaurant that received $2.1 million. The only cap is on how many full time employees you have. It is important to note that there is no limit on how many part time employees you have.
Is There Any Restriction On How I Spend The Money I Receive From ERTC?
There are no restrictions on how you spend your money. You can spend it on anything you like. You can reinvest it into your business, take a much-deserved holiday, buy a new car. It is totally up to you.
What Period Does ERTC Include?
For most businesses the ERTC includes from March 12th to December 31st in 2020 and Q1 – Q3 of 2021.
For Recovery Startup Businesses (See above) they can also claim from when they began operations, on or after 2/15/2020, up to and including Q4 of 2021.
Does ERTC Include Q4 Of 2021?
It only includes Q4 of 2021 if you are a recovery start-up business that meets certain eligibility criteria. For all other businesses it does not, but a new Bill called the Employee Retention Tax Credit Reinstatement Act has been proposed to reinstate the inclusion of Q4 2021.
Will ERC Be Extended To 2022?
We do not know if ERC will be extended. A new Bill has been proposed to reinstate the inclusion of Q4 2021. There is no information regarding possibly extending it to include 2022.
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