Navigating the Ongoing ERC Processing Delays: What You Need to Know

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What is the Employee Retention Credit?

What is the employee retention credit (ERC) and what does it entail?

Even if you had received PPP loans during the pandemic, there is a window of opportunity to receive a credit per employee that you kept on staff during the pandemic.

The program has a time limit – do you qualify? Learn more in the infographic below.

An infographic describing what ERC or Employee Retention Credit

 

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Understanding ERC — Employee Retention Credit

What Is ERC? 

      • A refundable federal tax credit designed to encourage employers to keep employees on payroll during the COVID-19 pandemic – Not a loan that needs repayment
            • Available for tax years 2020 and 2021
                  • 2020 ERC: 50% of up to $10,000 in wages paid per employee from March 12, 2020, to December 31, 2020
                        • Up to $5,000 per employee

                    • 2021 ERC: 70% of up to $10,000 in wages paid per employee per quarter for three quarters of 2021 (between $21,000 and $28,000 per employee)
                          • Only a company opened after February 16, 2020 with less than $1,000,000 in revenue can file for the 4th quarter of 2021 (Recovery Startup Business)

                      • Total: $26,000 – $33,000 of tax credit per employee, depending on whether your business was a Recovery Startup Business

              • Designed to help businesses:
                    • Recover from the 2020 economic shutdown

                    • Make up lost revenue from the pandemic

                    • Retain employees and continue business operations

                • The ERC program officially ended in 2021, but you can still file to receive funds

               

              Not all businesses qualify for ERC, although many of them do — and most don’t even realize it.

               

              Your business may qualify for ERC if:

                    • Significant decline in gross receipts during 2020
                    • General decline in gross receipts during 2021You experienced decreased revenue due to COVID-19
                      • ERC is qualified and claimed per quarter by comparing gross receipts in 2020 and 2021 to their corresponding quarters in 2019
                            • March

                            • June

                            • September

                            • December

                    • You are an organization operating in the US (regardless of size)
                        • Nonprofits

                        • Colleges and universities

                        • Hospitality

                        • Retail

                        • Industrial

                        • Real estate

                        • Construction

                        • Technology

                    • You experienced a full or partial suspension from government authorities that:
                        • Limited business hours

                        • Partially or completely suspended operations

                        • Shut down your supply chain or vendors

                        • Stopped the delivery of critical goods or materials

                        • Reduced offered services

                        • Limited workforce (that caused suspension of operations)

                        • Closed certain divisions or departments

                        • Stopped visitations to client job sites

                        • Reduced operations via social distancing

                        • Slowed work that could not be accomplished from home

                        • Limited travel and group meetings reduced operations
                            • Resulted in a ‘more than nominal impact’ on business operations

                            • “More than nominal” is defined as an impact of <10% per quarter
                                • For any quarter you had a full or partial suspension that lasted for a minimum of two weeks due to a government order, you may qualify for ERC in that quarter

                    • You qualified as a Recovery Startup Business in third or fourth quarter 2021
                        • You opened your business on or after February 16, 2020

                        • Your annual gross receipts don’t exceed $1 million for tax years 2020 and 2021

                        • You have 1+ W2 employees (not including owner-operators or family members)

                   

                    • Keep in mind ERC requires qualifying wages
                        • Includes cash payments and a portion of employer provided health care costs

                        • Businesses who received Paycheck Protection Program (PPP) loans may also still be eligible for ERC

                    • Credit amounts are based on whether an employer had more or less than 100 OR 500 average full-time employees in 2019
                        • Less than target number: Credit is based on wages paid to all employees whether they did or did not work during the calendar quarter

                        • More than target number: Credit is based on wages paid to employees who did not work during the calendar quarter

                    • In 2023, most businesses claim ERC by amending their tax filings
                        • It takes 4-10 months on average for the IRS to process ERC claims and mail checks  

                   

                  If you’re unsure how to get started with ERC, you can rely on qualified experts like Credit League for help

                   

                  Credit League Can Help You Save Up To $26,000 Per Employee

                    • Credit League: We are a US-based organization designed to help business owners claim applicable Employee Retention Credit

                    • Includes a highly trained team of attorneys and CPAs who can:
                        • Provide information about qualifications

                        • Help you prepare necessary documentation

                        • Complete your ERC filing and maximize your return

                    • We offer:
                        • One-on-one consultations

                        • Simple and confidential document uploads

                        • Payroll and pandemic impact reviews

                    • We maintain contact with the IRS from processing until checks are mailed to mitigate any issues affecting your filing status

                   

                  Take our five-minute qualifying quiz today to see if your business is eligible for ERC.

                   

                  Sources

                  https://home.treasury.gov/system/files/136/Employee-Retention-Tax-Credit.pdf

                  https://www.irs.gov/coronavirus/employee-retention-credit
                  https://www.lendio.com/blog/recovery-startup-business

                  https://www.cpapracticeadvisor.com/2022/09/28/who-actually-qualifies-for-the-employee-retention-credit/70935

                  https://www.irs.gov/newsroom/employee-retention-credit-2020-vs-2021-comparison-chart