Have you heard of the Employee Retention Credit?
The Employee Retention Credit
Covid has created many challenges for business owners. However, the good news is the government is rewarding business owners for retaining their employees during these challenging times. As a result, you may now be eligible for Employee Retention Credits (ERC) of up to $26,000 per employee.
The ERC program was created under the Coronavirus Aid, Relief and Economic Security Act (CARES Act) as part of the federal government’s relief program to encourage and reward business owners that retain employees during the COVID-19 pandemic. Recently the policy was amended to enable business owners to qualify for ERC tax credits even if they received PPP loans. The time period the program covers was also extended from March 22, 2020 to September 30, 2021.
Details of the Program Include:
Up to $26,000 PER EMPLOYEE
Available for 2020 and 1st through 3rd quarters of 2021
Qualify with decreased revenue, COVID related shutdown or supply chain disruption
No limit on funding (ERC is NOT a loan)
ERC is a refundable tax credit
YOU MAY BE ELIGIBLE IF YOUR COMPANY EXPERIENCED
Partial or Full Suspension of Operations
While the general qualifications for the ERC program seem simple, the interpretation of each qualification is very complex. Our significant experience allows us to ensure we maximize any qualifications that may be available to your company. Companies must have had only ONE of the following circumstances to be eligible for the Employee Retention Credit.
Supply Chain Disruption
Supply Chain Disruption can be anything from delayed supplies, changes in product, change in packaging, etc. For example, many restaurants weren’t able to get certain types of meat, paper towels or carryout containers during the pandemic. Delivery companies couldn’t get truck parts or scanners. Hotels were unable to receive furniture, towels and sheets due to ports being shut down, which delayed renovation plans. These impacts make a company eligible regardless of revenue gain or loss.
Gross receipt reduction criteria is different for 2020 and 2021. For 2020 you must have experienced a 50% reduction of gross sales for the 2020 quarter as compared to the same quarter in 2019. When and if the revenue reduction in 2020 gets back to 80% of the 2019 level, the qualification ends. For 2021 you can qualify if you had a 20% reduction of gross sales for the 2021 quarter as compared to the same quarter in 2019.
Full or Partial Suspension of Business Operations
A government authority required partial or full shutdown of your business during 2020 or 2021. This includes your operations being limited by commerce, inability to travel or restrictions of group meetings. This does not mean that your revenue must have decreased to use this qualification.
The ERC Process
DUB Financial will help you maximize your Employee Retention Credit in 4 Stages.
Stage 1 - Qualify
First you will qualify using our online tool.
Stage 3 - Processing
Step three is to wait for the IRS to complete their processing. It will take 4-6 months, on average, for the IRS to process your ERC submission.
Stage 2 - Document Review
Second, we will provide a secure upload portal for you to upload the required payroll documentation and PPP information. Our forensic tax experts will review your submission to ensure we have all information required to maximize your credit with the IRS.
Stage 4 - Receive Funds
Lastly, funds are received from the IRS in the form of a check to the business owner.
ERC Frequently Asked Questions
Can I Get ERC Funds If I Already Took The PPP?
Yes. The Taxpayer Certainty and Disaster Tax Relief Act of 2020, enacted December 27, 2020, modified the ERC credit rules. One of the modifications included allowing a company to have a PPP loan and still take advantage of the ERC credit. However, you can't use the same dollar for dollar funds. We take this into account when processing your ERC credit.
Do I Have To Repay The ERC Credit?
No. This is not a loan. It is a refundable tax credit. When we file your ERC claim we request a refund check for you.
My Revenue Went Up In 2020, Can I Still Qualify For The ERC Program?
Yes! There are two possible qualifications for 2020: revenue reduction, or a "full or partial shutdown of your business due to COVID-19". Specifically the IRS describes this as "A government authority required partial or full shutdown of your business during 2020 or 2021. This includes your operations being limited by commerce, inability to travel or restrictions of group meetings." Below are several examples of qualifying events:
Example 1: A restaurant must close or limit its on-site dining, such as having to close down every other table, due to COVID-19 restrictions.
Example 2: A business that needs to meet with clients in person and has to cancel meetings due to COVID-19 restrictions.
Example 3: A business has to reduce their operating hours because of COVID-19 restrictions and cleaning requirements.
Example 4: A business with a planned event has to cancel that event, or restrict the amount of people who can attend, due to COVID-19 restrictions.
When does the ERC Program end?
The deadline for claiming the ERC for eligible quarters in 2020 is April 15, 2024. The deadline for claiming the ERC for eligible quarters in 2021 is April 15, 2025.
How Long Does It Take To Get My ERC Credit?
This is how the process works: you send us the required documents and we process an analysis at no charge. The process from start to finish usually happens in 2-3 weeks. If you wish to move forward, you will select your desired payment option and we file your claim. Once filed, refunds are released based on IRS backlog. Currently, the IRS has stipulated a 20 week minimum turnaround on the ERC refunds.
Why did the IRS issue a warning about 3rd Party Processing companies?
The IRS issued these warnings, as there are many fly-by-night, so-called ERC “experts” or “consultants” that are misrepresenting their experiences and the parameters of the ERC program to employers. The ERC is a complicated tax program that requires deep expertise and understand of the nuances. When choosing an ERC company look for companies with a proven real track record and watch out for red flags (e..g, large upfront cost, no CPAs or tax professionals on staff)
Is The ERC Credit Taxable?
The ERC credit is not considered income for federal income tax purposes, but you must reduce any deductible wage expenses by the amount of the credit. Please provide the credit information to your CPA for tax purposes.
Can't I Just Have My CPA File? Why Would I Use DUB Financial?
Of course. The challenge is the ERC credit is taken on your payroll returns and not through your business income tax returns, which is what most CPA's handle. Because of this most CPA's don't process this credit, unless they process your payroll in house. This is also a big reason why this credit is so underutilized. Since CPA's don't typically handle it and they are the tax experts, it has mostly fallen in a middle ground where few are able to effectively process the credit. Interestingly, we receive a large portion of our clients from CPA's.
DUB Financial has strategically partnered with forensic and payroll tax experts with decades of payroll experience to help businesses understand and maximize the ERC program.
I'm A CPA Or A Payroll Company, Can I Refer My Clients To DUB Financial?
Can I Qualify For The ERC If I'm Self Employed?
No, if you are majority owner (over 50%) of your company then your wages do not qualify.
Will the ERC funds run out?
This is not a lending program - tax refunds are issued by the US Treasury. Therefore, all eligible employers will receive the funds.
How Will I Pay The Fee?
We understand your refund check may not arrive for several months (20 weeks minimum according to IRS documentation), so we offer two payment options - you may pay your fee upfront at a discount - or - the full fee can be deducted from your refund once received. Upfront payments can be completed by credit card. Regardless our fee is covered by our 100% Money Back Guarantee. If the IRS does not release the credit claimed for any reason, we will refund any payments made.
How Much Do You Charge?
Our service charge is based on a percentage of the credit recovered. We calculate and provide our fee with our free analysis. Just like a good CPA, using the right team for this process pays for itself.
I'm Getting More In ERC Credit Than I Paid In Taxes?
Remember that this program is taken according to payroll taxes paid, not on income taxes. ERC funds not applied towards owed payroll taxes are treated as an 'overdeposit' of taxes that will be requested as a refund check from the IRS.
As an owner are my wages, or the wages of any family member I employ, eligible?
Maybe. Wages of owners who have majority ownership, defined as over 50%, are not eligible, nor are the W2 wages of any immediate family members of the owner. In the case an owner has less than 50% ownership, their W2 wages are eligible, as are the W2 wages paid to immediate family members.
Ready To See If You Qualify?
Still Have Questions?
After receiving or filing for your ERC refund...
What would you like to accomplish next?
DUB Financial will help you explore our services, identifying the combination of strategies that will help you lower costs and create efficiencies.
DUB Financial can help you find a variety of new and affordable employee benefit programs to help you retain employees and hire competitively.