ERC or the Employee Retention Tax Credit is part of the CARES Act and American Rescue Act legislation. It is a broad based refundable tax credit that was designed to encourage employers to keep employees on their payroll during the pandemic. Eligible employers can benefit up to $26,000 per employee even if they received PPP during the 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.

Of course, the challenge in 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.

PPP was a forgivable loan. ERC returns the payroll taxes that your business has already paid. Once your business receives the ERC funds from the US Treasury, it does not have to pay back the credit.

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.

This is not a lending program - tax refunds are issued by the US Treasury. Therefore, all eligible employers will receive the funds.

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 qualifying events:

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 their operating hours because 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.

Yes. To qualify, your business must meet at least one of the following criteria:

1. Had to change business operations due to government orders

2. Experienced a decline in gross receipts by 20%

3. Change in business hours

4. Partial or full suspension of your operations

5. Shutdowns of your supply chain or vendors

6. Reduction in services offered

7. Reduction in workforce of employee workloads

8. Disruption in your business (division or department closures)

9. Inability to visit a client’s job site

10. Suppliers were unable to make deliveries of critical goods or materials

11. Reduced space / social distancing requirements for employees and - customers

12. Change in job roles / functions

13. Tasks that couldn’t be done from home or while transitioning to remote work conditions

14. Lack of travel

15. Lack of group meetings

16. Many items are considered as changes in business operations, including shifts in job roles and the purchase of extra protective equipment.

Determining the proper amount of a refund is a complex accounting process. Although these are payroll tax credits, what you’ve paid in payroll tax has no bearing on your ERC calculations. The refunds are based on many factors including qualifying quarters, number of employees, hours worked, wages paid and if applicable, PPP loans, group health premiums and participation in other government programs to name a few.

Our customers have recovered over $3 billion dollars in refunds for qualified businesses—sometimes for companies that were previously told they did not qualify. It won’t cost you a penny to see how much your company may recover.

No, if you are majority owner (over 50%) of your company then your wages do not qualify.

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 'over deposit' of taxes that will be requested as a refund check from the IRS.

Maybe. Wages of owners who have majority ownership, defined as over 50%, do not qualify, nor do the W2 wages of any immediate family members of the owner. In the case an owner has less than 50% ownership, their W2 wages qualify, as do the W2 wages paid to immediate family members.

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.

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.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.