What is ERC and how does it work?

ERC (Employee Retention Credit) is an IRS program that was passed by Congress and signed into law as part of the CARES Act of 2020. Its purpose is to provide financial relief for U.S. businesses that kept people employed during the Covid-19 pandemic.

Here are the mechanics of how it works:

Your business can claim ERC money by filing IRS Form 941-X (an amendment to your 941) for any eligible quarters in 2020 and 2021. Once the IRS approves and processes your ERC filing, they send you the funds as a physical check. Unlike the PPP program, there are no restrictions on how you use ERC funds.

Who is eligible for ERC?

Virtually any U.S. business that paid employees during 2020 or 2021 may be eligible for ERC, including businesses that received other emergency benefits (such as a PPP loan). Generally, eligibility falls into one of three scenarios:
(1) Your gross quarterly receipts decreased in 2020 or 2021 (compared to the same quarter in 2019)
(2) A government order impacted your operations (in capacity or hours worked)
(3) Your operations were impacted by a supplier’s compliance with a government order

How much money is ERC worth to my business?

Your ERC filing can be worth up to $26,000 per W2 employee. Calculating your ERC eligibility and amount is subject to a set of rules that can get complex and nuanced, depending on your specific situation. We encourage eligible businesses to take advantage of this program, while adhering carefully to the IRS rules and guidelines.

Will ERC funds run out, and is there a filing deadline?

The ERC program is written into tax law. It is not a “funded” or “first-come-first-served” program that could run out of money. The ERC filing deadline for any portion of 2020 is April 2024. For any portion of 2021, the deadline is April 2025.

ERC is not currently available for 2022 or beyond.

How long will it take?

Determining your ERC eligibility, calculating your ERC amounts, and preparing the IRS filings can take days or weeks, depending on the complexity of your situation. We work fast and efficiently to complete your filings. Once your paperwork has been sent in, processing times vary and are not guaranteed by the IRS. Currently, we’re seeing IRS processing times ranging from 4 to 8 months — sometimes sooner. Yet with tax season rapidly approaching, it’s important to submit as soon as possible as the IRS will only become more backlogged.

Why can’t my bookkeeper or CPA do this for me?

ERC is a one-time payroll tax program, falling outside the scope of normal accounting requirements for businesses. As a result, most CPAs aren’t able to take the time to study the Cares Act and the hundreds of pages of official ERC guidance published by the Treasury Department to be fully up to speed on the complexities of the program. They’ve got enough on their plates — let us help.

How should I choose my ERC partner?

The most important decision you’ll make on your ERC journey is choosing the right partner to guide you through the process.

You’ll want a knowledgeable and experienced ERC tax professional who will answer your questions, spend the time to understand and document how your unique business situation applies to the ERC rules, and analyze the details to ensure you’re getting the maximum amount of money you’re eligible for, as quickly as possible.

That’s us. Our ERC experts have successfully guided hundreds of businesses through the ERC process. As a team, we’ve put over $100 million dollars back into the hands of business owners like you, across a wide range of industries.

Where should I begin?

You can start by completing our 5-minute questionnaire, which gives us an initial picture of your business and potential ERC eligibility.

After completing the questionnaire you can schedule a free consultation call with a senior ERC tax expert.

We look forward to speaking with you!