When the Covid-19 pandemic began, and businesses were forced to shut down their operations, Congress passed programs to provide financial assistance to companies. One of these programs was the Employee Retention Tax Credit (ERC)
The ERC gives eligible employers payroll tax credits for wages and health insurance paid to employees.

What Is The ERC?

Originally available from March 13, 2020, through December 31, 2020, the ERC are refunds of payroll tax paid by businesses to the IRS. It was created as part of the Cares Act. The purpose of the ERC was to encourage employers to keep their employees on the payroll during the pandemic.

Qualifying employers and borrowers that took out a Paycheck Protection Program loan could claim up to 50% of qualified wages, including eligible health insurance expenses. The Consolidated Appropriations Act passed in June of 2021, expanded the ERC. Employers that qualified in 2021 can claim a credit of up to 80% in qualified wages, to be paid back as a payroll tax refund check.

How much can you get?

The official IRS statement is up to $26,000 per employee you have on the books. Typically, business owners are seeing between $8,000 and $12,000 per employee. And the average ERC refund in 2022 nationally has been $300,000.

Who Is Eligible For The ERC? (all businesses with at least one employee)

There are three ways a business can qualify. Just ONE of these will allow a business to qualify, they don’t have to experience all three issues.

One: To be eligible for ERC in 2020, you need to show that you experienced a significant decline in sales in 2020 —less than 50% of comparable gross receipts compared to 2019. But in 2021, you only need to show a 20% reduction in gross receipts.

Two: Did your business have supply chain issues, lack of inventory, vendors with slow turnaround time, delays in shipments, paying more for same or similar products to run the business?

Three: Full or partial closing due to government mandates, social distancing changing your business practices, and reduced ability to run business as normal. (Didn’t every business experience that?)

If you experienced any ONE of these THREE issues, you probably qualify for the refunds!

How To Claim The Tax Credit

Even though the program ended in 2021, businesses still have time to claim the ERC thru the end of 2022, and beyond. But the funds are limited and will be paid out on a first come first served basis, so time is of the essence.

Some businesses, especially those that received a Paycheck Protection Program loan in 2020, mistakenly believed they didn’t qualify for the ERC.

But even those who received PPP and EIDL funding, can qualify for the ERC.

Since the tax laws around the ERC have changed, it can make determining eligibility confusing for many business owners. It’s also difficult to figure out which wages qualify, and which don’t. The process gets even harder if you own multiple businesses. If you’re running into issues applying for the ERC, it can be helpful to consult with a tax professional.

U.S. Merchant Payment Solutions is just one company that helps business owners successfully get their ERC refunds. The servicing company providing the document filing with the IRS has over 25 CPA’s, 12 Tax Attorneys, and has been in business for over 12 years. They even are providing auditing services to federal agencies, like the FBI. To date, they have helped over 20,000 merchants file and receive funding.

Check with your tax professional or contact U.S. Merchant Payment Solutions to see if you are on the right track. A 25-minute questionnaire by phone will provide you an estimate of what you can get back of the payroll taxes you already paid in.

This money is already earmarked for distribution and can’t be put back into the coffers… so take advantage of this opportunity and accept the Federal Governments ‘thank you’ for staying open over the past few years.

The info provided here is not investment, tax or financial advice. Consult with a licensed professional for advice concerning your specific situation. This article compiled from a Forbes Magazine article, June 2022 by Joe Camberato. Contact Ken Givens at 254-863-2567 extension 101, or 512-848-1069, or email KenGivens@USmsTexas.com. Ken helps businesses of all sizes in Central Texas and is the past President of the Groesbeck Chamber of Commerce.