Employee Retention Credit (ERC) - Qualifying employers could receive up to $26,000 in federal tax credits per employee.
Dear Clients,

I am researching an overlooked and underutilized federal tax credit program that was funded in 2020. The Employee Retention Credit (ERC) was intended to provide COVID tax credits for employers who keep their employees on payroll. The Employee Retention Credit was not part of the Paycheck Protection Program (PPP). Most businesses applied and received PPP loans through their banks. These loans were forgiven with the remittance of additional paperwork.

The federal government paid 5% of the total PPP Loan as a fee for service to the banks that provided the PPP loans. There were no incentives paid to the banks to assist employers in determining if they were eligible for the ERC tax credits. It is for this reason that most of the funds allocated to the ERC have gone unclaimed. If the ERC funds are not claimed in the next two years, I understand the funds will be reallocated to whatever social economic need is present in the future.

Many accountants and CPA’s do not offer the services required to determine a business ERC eligibility. This is similar to most accountants and CPA’s not offering the services necessary to provide ACA tax reporting. Specialized accounting and specific analytical skillsets are required to prepare ACA tax reporting and in determining ERC eligibility.

https://tinyurl.com/yc7tkyts

• For an employer that averaged more than 500 full-time employees in 2019, qualified wages are generally those wages paid to employees that
were not providing services because operations were fully or partially suspended or due to the decline in gross receipts.
• For an employer that averaged 500 or fewer full-time employees in 2019, qualified wages are generally those wages paid to all employees
during a period that operations were fully or partially suspended or during the quarter that the employer had a decline in gross receipts
regardless of whether the employees are providing services.

Retroactive to the March 27, 2020, enactment of the CARES Act, the law now allows employers who received Paycheck Protection Program (PPP) loans to claim the ERC for qualified wages that are not treated as payroll costs in obtaining forgiveness of the PPP loan.

https://tinyurl.com/yc7tkyts

John Chisolm
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