The Employee Retention Credit (ERC) is a refundable payroll tax credit for employers in which they can receive up to $26,000 per employee. This relief legislation was passed by Congress through the CARES Act to help businesses and nonprofit organizations impacted by COVID-19
- The 2020 ERC Program is a refundable tax credit of 50% of up to $10,000 in wages paid per employee from the period of 3/12/20-12/31/20 by an eligible employer. This averages out to $5,000 per employee.
- The 2021 ERC Program increased to 70% of up to $10,000 in wages paid per employee per quarter for the typically first 3 quarters of 2021. This can be up to $7,000 per quarter or about $21,000 per employee.
- The Recovery Startup Business ERC program provides another refundable tax credit for small businesses who start a new trade or business or invest in real estate. This credit also equals up to 70% of up to $10,000 in wages paid per employee per quarter, or $7,000 per employee, for the third and fourth quarters of 2021 but no more than $50,000 per quarter.
No, the ERC is not a loan, it is a refundable tax credit in which you will receive a refund check.
Yes. You can still qualify for an ERC refund check, even if you received PPP. The CARES Act did originally prohibit having both the ERC and a PPP loan, however the stimulus legislation that has recently passed now allows your business to take advantage of both the PPP and ERC refund.
Yes. The ERC does apply to Nonprofits as well. Organizations such as hospitals, schools, museums, performing arts centers, and churches can qualify for the ERC.
If you started a new trade or business, your business saw gross receipts or hours of service reduce by 10% or more, or if gross receipts declined by more than 20%, your business would likely qualify for the ERC Tax credit.
What does a full or partial suspension mean?
A full or partial suspension due to a federal, state or municipal order means you suspended or partially suspended operations due to a government order, proclamation or mandate related to COVID-19.
A partial suspension means at least a 10% reduction in hours or gross receipts.
The government order may affect your operations. Or the operations of a vendor in your supply chain.
Examples of partial suspensions might include
- Limiting capacity,
- Reducing hours,
- Installing or utilizing protective equipment,
- Operational impact related to key suppliers,
- Unable to attend trade shows in-person,
- Had staff go from in-office to work-from-home and impacted your business,
- Closed a particular department even though other departments were still in operation.
These are just a few examples, and as part of your process we will assist you in identifying and documenting these items.
A change in operations could mean
- Additional cleaning or sanitizing,
- Limiting capacity,
- Reducing hours,
- Installing or utilizing protective equipment,
- Temperature checks,
- Operational impact related to key suppliers or customers,
- Unable to attend trade shows in-person,
- Had staff go from in-office to work-from-home and impacted your business,
- Closed a particular department even though other departments were still in operation.
These are just a few examples, and as part of your process we will assist you in identifying and documenting these items.
Ideally, your CPA learned the ERC laws and rules in 2020 or 2021 and arranged for your firm to get its refunds them. So one, two or three years ago. Back when you really need the funds.
And if that happened, you don’t need our help.
But if that didn’t happen? If you haven’t already had experts assess your eligibility and apply for your refunds? And collected the money? You already know you need to find a new resource.
And that resource can be ClearERC.
ClearERC was solely created to help businesses get the maximum ERC that they are entitled to. We pride ourselves on employing a level of professionalism and efficiency, partnering with the top CPAs and Tax Attorneys specializing in this particular field, in order to get you your return as quickly as possible.