Navigating the Application Process for Employment Retention Credit (ERC) Tax Credit

Employee retention tax credit application

Are you trying to apply for the Employment Retention Credit (ERC tax credit)? If so, this guide will help you understand what it is and how to go about applying for it.

The ERC is a refundable federal income tax credit that helps employers offset part of their payroll costs during the coronavirus pandemic. The ERC was established by the CARES Act in March 2020 and allows eligible employers to claim a 50% credit on up to $10,000 of wages paid per employee between January 1, 2021 and June 30, 2021. This includes wages paid for leave taken under the Families First Coronavirus Response Act (FFCRA).

In order to be eligible for the ERC, an employer must have experienced either:

• A full or partial suspension of operations due to orders from an appropriate governmental authority limiting commerce, travel, or group meetings due to COVID-19; OR

 • A significant decline in gross receipts as compared with a similar quarter in 2019.

To qualify for this second option, gross receipts must fall below 80% of the same quarter’s gross receipts from 2019.

If your business meets these eligibility requirements then what is needed to begin applying for the ERC is to use the business payroll for the years 2020 and 2021. If you use a qualified ERC consulting business that ERC specialist will assist you all the way through to ensure an easy process.  

Once the ERC Specialist receives all the paperwork from you that is needed to submit your request to the IRS, they will be able to provide you an exact number of your expected ERC refund. They will then submit the forms to the IRS in which it will then take approximately 4-6 months until you will receive notification that your refund is on the way.

Applying for Employment Retention Credit can seem daunting but following the instructions outlined above and working with an ERC Specialist that will do all the hard work, the process will be less stressful allowing applicants to receive benefits sooner rather than later. Each business is unique and is on a case-by-case basis but the majority of the funding comes in with no problems.

Businesses are still trying to get back to their full potential after the CoVid-19 pandemic has passed and the ERC funding that has been offered to them has been very helpful for many. If you were told you did not qualify, you should get a second opinion as a decision this large and this helpful to your business should be double-checked. Most businesses with employees that were retained during 2020 and 2021 will qualify. Check it out and you could be the next Employee Retention Credit funding success story.

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