Offer Employee Retention Credit services today

The Employee Retention Tax Credit (ERTC), which is also known as ERC (Employee Retention Credit), is an is an IRS tax credit designed to help small businesses retain their employees during the COVID-19 pandemic. The credit is meant to refund the payroll expenses impacted businesses already paid to the federal government. The biggest benefit of ERC is the money received does not have to be repaid - it's like a stimulus check for qualified businesses. The vast majority of companies with between 2 and 500 employees can qualify for this credit, even startups and nonprofit organizations.

There's no real difference, but you may see different acronyms used across the industry. ERC stands for 'Employee Retention Credit', also known as the ERTC 'Employee Retention Tax Credit. This program was created by the Coronavirus Aid and Relief Act in 2020 to help businesses keep employees on their payroll. The Employee Retention Tax Credit (ERTC) and Employee Retention Credit refer to the same program.

There are two ways most businesses or organizations can qualify for the ERC:

First, a business may have experienced a decline in gross receipts over a declared quarter. If the business is claiming the credit for 2020, a decline of 50% or more must be shown; however the credit is capped at $5,000 for the year per employee. If the business is claiming the credit for 2021, the government expanded the credit for businesses who only experienced a 20% reduction in revenue. For the first three quarters in 2021 businesses can be eligible for up to $7,000 in credits per employee. Therefore the total eligible credit per employee for each quarter is $26,000.

Second, businesses may have experienced either a “Complete or Partial” Closure. During the COVID pandemic, local government restrictions and mandates were put into place across the US including social distancing, being compelled to work from home, or even the closure of a business in its entirety. A business that was subject to any of these orders may qualify. Not sure if a business was impacted? We can check for you during your application using our database of government orders.

Forgiven Paycheck Protection Program (PPP) loans and certain other COVID-19 relief grants may be excluded from the gross receipts calculation if excluded from all quarters consistently. For guidance on this safe harbor, see more from the IRS.

If a business has more than one legal entity or is part of a controlled group or an affiliated services group, all entities must be aggregated under the rules in IRC Sections 52 and 414. IRS aggregation rules apply to your gross receipts calculation, so you must take into account the gross receipts of all entities in the group. See more from the IRS.

The maximum amount per employee is $26,000 if a business is eligible or qualifies.

No. Think of this as a refund on payroll taxes filed in 2020 and 2021. It's a refundable tax credit that qualified businesses or organizations do not have to repay.

Our partner has done as much work as possible to automate and simplify the application while also ensuring we can maximize the credit. If you have all the required business information at hand, the application can take as little as 20 minutes.

Businesses receive the ERC by filing a 941-X Amended Quarterly Payroll Tax return. The deadlines to apply are: For Q1-Q4 2020, ERC claims must be filed by April 15, 2024. For Q1-Q4 2021, ERC claims must be filed by April 15, 2025.

No. We partnered with Global Government Partners (GGP) dba ERC Digital, to offer this exclusive service. When you sign up for the ERC program, ERC Digital will evaluate your eligibility and once approved, you will be given access to their web portal. ERC Digital guides you through the application process. Whether you are applying for your own business or on behalf of a client, you will be walked through the ERC application process. ERC Digital works with a Big Four accounting firm to review the application before it is submitted to the IRS to verify the application is complete and to validate eligibility.

A service charge is based on a percentage of the credit recovered. If you choose to use our partner's services, the ERC applicant will pay an amount equal to 20% of the total ERC refund actually received from the IRS. While we don't guarantee that applicants will receive an ERC refund equal to the amount calculated, in the event that an applicant receives more, only a portion, or none of the amount calculated as an ERC refund, the fees will be increased, decreased, modified, or limited by the amount (if any) of ERC received.

If fees are paid in advance of the IRS determination of the ERC refund, and the refund is less than the calculated value, the fees will be refunded in proportion to the difference. If the ERC refund is more than the calculated value, the applicant agrees to make an additional payment to our partner in proportion to the difference.

Any additional payment is due upon receipt of an invoice from our partner. The ERC platform is free to get started, a service charge is required in order to receive raw calculated data or a completed and signed 941-X to file.

The IRS is hard at work processing these applications and refunds. The wait time is currently between 9-12 months from submitting a claim to receiving the money. Our partner has a direct link to the IRS to provide the status of a refund. This information is updated daily and an email alert is sent when an application is received by the IRS, accepted, processed and mailed to the applicant.

The federal government offers the ERC for the six quarters from Q2 2020 to Q3 2021. The credit is calculated on a quarterly basis. Some businesses may qualify for all quarters, while others may qualify for only a few. Businesses may also qualify for non-consecutive quarters as well.

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.

The only caveat is businesses can't use the same dollar for dollar funds. Our partner's calculator takes this into account. When the ERC was first introduced in the Coronavirus Aid, Relief, and Economic Security (CARES) Act, a business that received a PPP loan wasn't eligible for the ERC.

Since the enactment of the Consolidated Appropriations Act, 2021 (CAA) in December 2020, PPP recipients can claim the ERC retroactive to March 13, 2020 on qualified wages that aren't paid for with forgiven PPP loans. Example: a business obtains a PPP loan of $2,500,000. During the loan coverage period, the business incurs $2,000,000 in payroll costs and $1,000,000 of other PPP-eligible expenses.

Expenses included in the PPP forgiveness application: $1,500,000 60% payroll costs $1,000,000 40% other PPP-covered expenses (rent, mortgage interest, etc.) and $2,500,000 total potential loan forgiveness. The business may be able to claim the ERC on the remaining $500,000 of unforgiven payroll costs.

The definition of Qualified Wages varies depending on the years that the credit is being claimed for:

For 2020:

For eligible employers that had an average number of full-time employees in 2019 of 100 or fewer, all wages paid to and qualified health plan expenses incurred for employees during the eligible period(s) may count toward the ERC.

For eligible employers that had an average number of full-time employees in 2019 of greater than 100, wages paid and allocable qualified health plan expenses incurred for time not providing services due to a full or partial suspension by governmental order or the business experiencing a >50% decline in gross receipts for a calendar quarter when compared to the same quarter in 2019 may count toward the ERC.

For 2021:

For eligible employers that had an average number of full-time employees in 2019 of 500 or fewer, all wages paid to and qualified health plan expenses incurred for employees during the eligible period(s) may count toward the ERC.

For eligible employers that had an average number of full-time employees in 2019 of greater than 500, wages paid and allocable qualified health plan expenses incurred for time not providing services due to a full or partial suspension by governmental order or the business experiencing a >20% decline in gross receipts for a calendar quarter when compared to the same quarter in 2019 may count toward the ERC.

If you'd like more guidance on the types of health plan expenses that may qualify, see more from the IRS here.

This is a very common situation but can seem complicated. If a business has more than one legal entity or is part of a controlled group or an affiliated services group, all entities must be aggregated under the rules in IRC Sections 52 and 414. These aggregation rules apply when determining the number of full-time employees, whether there was a full or partial suspension of operations and if the employer experienced a significant decline in gross receipts. Here's a quick test:

If an applicant's response to any of the questions below is “Yes,” then IRS aggregation rules apply to their situation.

1. Does another business own >50% by vote or value of the applicant's business?

2. Does the applicant's business own >50% by vote or value of one or more businesses?

3. Does the same individual or group of five or fewer individuals, estates or trusts own at least 80% of the applicant's business AND one or more other entities, and does the individual’s or group’s common ownership of one or more of those entities exceed 50%?

4. Does the applicant treat themself as part of an affiliated service group for purposes of employee benefit plans?

Determining whether the business experienced a full or partial suspension due to a governmental order should be evaluated separately for each trade or business.

You may have seen this term in the IRS rules for ERC. Basically, if the applicant's company qualifies for ERC as a Recovery Startup Business, special rules apply, In order to meet the definition of a “Recovery Startup Businesses'' a company must have been founded after Feb 15, 2020; and also have less than $1 million in revenue.

Applicants may be able to claim the ERC if they have already applied for PPP loan forgiveness and have already received other tax credits, so long as they don't claim the ERC on the same wages. The IRS prohibits “double-dipping” on these programs, which means that any wages used to qualify for one program typically can’t be used to qualify for another. Such programs include but aren’t limited to the PPP, Sections 7001 and 7003 of the Families First Coronavirus Response Act (FFCRA paid leave credits), the Section 45S credit for employer-provided paid family and medical leave, and the Work Opportunity Tax Credit (WOTC). See more from the IRS here.

The following information is needed: An understanding of how the business is eligible for the credit, gross receipts for the business for each quarter in 2019 through Q3 2021, a list of suspended locations with suspension dates (if the business is eligible due to a suspension mandated by a governmental order), and detailed payroll information for the business, including health plan expenses.

Unlike the PPP, the ERC calculation varies based on the average number of full-time employees (not full-time equivalents) the business had in 2019. A “full-time employee” is an employee who works an average of at least 30 hours per week or 130 hours per month, as outlined in Section 4980H of the Internal Revenue Code. Note that 1099 contractors should NOT be included here.

If the average number of full-time employees in 2019 was above the small employer threshold (>100 full-time employees in 2020 and >500 full-time employees in 2021), the qualified wages are based on wages paid to employees for time they didn't provide services due to a full or partial suspension or significant decline in gross receipts.

Example: a business paid employees for a 40-hour week during the impacted period but employees were only able to work for 30 hours due to a governmental order. In this case, 25% of the wages paid was for time the employees did not provide services.

The following are generally considered examples of “time not providing services” in relation to qualified wages:

Essential employees who temporarily could not work on-site due to the COVID-19 outbreak
Employees who volunteered at non-company sites (e.g., hospitals) but were kept on payroll
Employees who reported for work but were sent home​
Employees who were “on call” to report for work​
Employees who used paid time off (PTO) that was granted after the beginning of the pandemic
Employees who were unable to fulfill all of their responsibilities due to teleworking constraints ​
Employees who were paid for full-time work but worked less than full time (e.g., idle time)
The following are generally NOT considered examples of “time not providing services”:

Employees performing administrative or other tasks not part of their regular role
Employees not working due to a company-wide mandate not tied to a governmental order
Employees that used PTO that was accrued prior to the pandemic
Employees showing up to work but have less work to do than normal (e.g., waiting for customers to arrive)

If a business has more than one legal entity or is part of a controlled group or an affiliated services group, all entities must be aggregated under the rules in IRC Sections 52 and 414. These aggregation rules apply when determining the number of full-time employees, whether there was a full or partial suspension of operations and if the employer experienced a significant decline in gross receipts.

If the business' response to any of the questions below is “Yes,” then IRS aggregation rules apply to their situation.

Does another business own >50% by vote or value of the business?
Does the business own >50% by vote or value of one or more businesses?
Does the same individual or group of five or fewer individuals, estates or trusts own at least 80% of the applicant's business AND one or more other entities, and does the individual’s or group’s common ownership of one or more of those entities exceed 50%?
Does the business treat itself as part of an affiliated service group for purposes of employee benefit plans?
Determining whether the business experienced a full or partial suspension due to a governmental order should be evaluated separately for each trade or business.

In 2020, tax-exempt organizations (excluding governmental employers) are eligible. Beginning in 2021, public colleges, universities and government entities providing medical or hospital care are also eligible for the ERC.

A 1099 worker cannot be claimed as an eligible employee for a business.

An employee’s hire date has no effect on determining eligibility. Any employee can potentially be an eligible employee for the business if all other requirements (e.g., business eligibility, wages/health care paid) are met.

Yes, the ERC credit is subject to income tax. Section 2301(e) of the CARES Act provides that rules similar to section 280C(a) of the Internal Revenue Code (the "Code") apply. An employer’s deduction for qualified wages, including qualified health plan expenses, is reduced by the amount of the employee retention credit within the same taxable year.

Essential businesses may be able to claim the ERC if they can meet one of the two eligibility tests: 1) their business had a significant decline in gross receipts or 2) their business was considered fully or partially suspended due to a governmental order with more than a nominal impact to business operations. Please refer to “How do I know if a business qualifies for the ERC?“ above for more information.

If a business was started in 2020, that business may qualify for the ERC in calendar year 2020 by a full or partial suspension due to a government order. The gross receipts comparison cannot be completed in 2020 absent gross receipts from 2019. In 2021, the gross receipts test can be applied comparing a calendar quarter in 2021 to the same calendar quarter in 2020.