Trusted Guidance on Tax Credits and Other Exceptional Financial Opportunities for Businesses, Churches, Private Schools, and Other Nonprofits.

You are not eligible if you do not pay W2 wages outside of owners and their family members by blood or marriage. You are not eligible if you did not experience a ‘nominal impact’ on part of your business from government mandates related to Covid-19. If you are the latter, it often takes an in-depth analysis to make this determination. There is no financial risk to do this.

Yes, if you closed temporarily but paid W2 Employees in some of the seven eligible quarters, you may qualify.

It’s hard to find anyone who will do this work for less than 5 full-time employees. However, we have a partner firm willing to do it.

Whoever owns the EIN can file for this credit. The checks are made to the entity/EIN that paid the W2 wages during 2020-2021. As an example, if a business owner sold the assets of the business (customer list, equipment, logo, etc), but retained the EIN, they can still make this claim. If your number is fewer than five, we recommend asking your accountant if you qualify for any of the quarters available under “a significant decline in gross revenue.” This is a rather simple calculation, and if you qualify under one quarter for this, you can often claim one or two more quarters after this. You can also look at the IRS website to see these rules. If you do qualify for some of the seven quarters this way, ask an accountant with ERC filing experience to help you.

If you do not qualify under gross revenue decline for any quarters and have four full-time employees, we can sometimes get an exception. The problem is that the CPA firm that does this work for you often loses money because the claim is so small.

The majority of the money to be claimed is found in the first three quarters of 2021. The more full-time employees you had then, the greater your possible claim is.

Clergy who claim the housing allowance are excluded from the employee count.   

Let’s start with an easy example. A restaurant is ordered to shut down its in-store dining, but that same restaurant was permitted to offer drive-thru, pick-up, and/or catering. It requires more rules to define partial suspension under supply chains or other situations that limit commerce, travel, or group meetings. Much of these rules are covered in IRS Notice 2021-20, which is 102 pages. For a shorter read, here are some FAQs from the IRS website. https://www.irs.gov/newsroom/covid-19-related-employee-retention-credits-determining-when-an-employers-trade-or-business-operations-are-considered-to-be-fully-or-partially-suspended-due-to-a-governmental-order-faqs

The best place to read is IRS Notice 2021-20. https://www.irs.gov/pub/irs-drop/n-21-20.pdf

You can also read IRS FAQs. https://www.irs.gov/newsroom/covid-19-related-employee-retention-credits-determining-when-an-employers-trade-or-business-operations-are-considered-to-be-fully-or-partially-suspended-due-to-a-governmental-order-faqs

There is additional IRS guidance on the IRS website in addition to the legislation. The original legislation is found under section 2301 of the CARES Act, but it was revised three times after this.

“ERC is an eligibility matrix.” Bloomberg Tax August 10, 2022.

ERC is complex, and is much more about law than accounting, which is why it’s vital to seek advice from a firm that specializes in ERC, and is under the counsel of a tax attorney.   A significant decline in gross revenue is only one way to qualify.  We estimate over 75% of claims made do not qualify this way.  Rather, they qualify because they experienced more than a “nominal effect” caused by a government order.   There are hundreds of pages of legislation IRS guidance that help describe eligibility.  

This was changed by the Consolidated Appropriations Act that went into effect in 2021.

“ERC is an eligibility matrix.” Bloomberg Tax August 10, 2022.

ERC is complex. IRS Notice 2021-20 expands the definition of “partial suspension” to include factors beyond closing your doors.  It is vital to seek advice from a firm that specializes exclusively in ERC to make this determination

Unfortunately not. There has to be a nominal impact that was caused directly or indirectly by a Covid-19 government ordinance.

The IRS has warned twice as of May 2023 to beware of 3rd party solicitations that seem ‘too good to be true.’  Similar to PPP loans and Social Security claims, there are always schemes and frauds. Rightfully so, the IRS is concerned by the number of seemingly unqualified companies now advertising for ERC. While there is zero evidence that you are more likely to be audited, our recommended providers prepare all their filings as if each client was audited.  If for any reason you are audited for this filing, that firm would be completely prepared to win the audit by showing the documentation that supports your claim.