The ERC was not widely used until March 2021, when updated IRS regulations made this type of COVID-19 Relief more accessible. In short, thousands of businesses who once picked between the Paycheck Protection Program (PPP) and ERC can now possibly use both, by amending their Quarterly Form(s) 941.
Criteria #1: Must Issue a Formal Payroll
Employers must file Form 941s and W-2s. (Sole-proprietors are ineligible)
Criteria #2: Eligible Employee Headcount
Employers must have below a certain number of full-time employees in 2019. (NOTE: this is not the same as full-time equivalents – FTEs)
– 2020 program: fewer than 100 full-time employees (unlimited part-time employees)
– 2021 program: fewer than 500 FT employees
(unlimited part-time employees)
Criteria #3: Must Meet one (not necessarily both) of:
A: Reduce Business Receipts (Sales for a Calendar Quarter)
For example: A business with $100k in sales for Q2 2019 vs
– Q2 2020: eligible with < $50k in sales (or 50% lower)
– Q2 2021: eligible with < $80k in sales (or 20% lower)
B: Must have been fully/partially shut down by government order
A “Stay At Home” order for non-essential businesses, or a capacity limit for a restaurant, would meet this test. (The order is likely jurisdiction specific.) You can also have the same, or even more sales, and still qualify.
The Employee Retention Credit will be claimed against the employer’s portion of employment taxes (including Social Security and Railroad Retirement). If your ERC exceeds the amount due, it is then viewed as an overpayment and is refundable.
Use our secure portal to upload your 941 returns, PPP loan documents, and raw payroll data.
We will use our expertise to calculate the exact value of the credit you can receive from the IRS.
We will prepare and help file the 941-X Amended payroll returns.
On November 15, 2021, President Biden signed the Infrastructure Investment and Jobs Act into law, and the Employee Retention Credit sunset date was moved from 12/31/2021 date to 9/30/2021 (for businesses other than ARPA Recovery Startup Businesses).
HOWEVER, this does not mean the ERC was eliminated! Eligible businesses can still apply for stimulus funds based on financials between 3/13/2020-9/30/2021.