What is the Employee
Retention Tax
Credit?
The Employee Retention Credit (ERC), established by the CARES Act in March 2020, is a refundable tax credit that rewards eligible businesses for retaining employees on payroll during 2020 and 2021. This credit is calculated as a percentage of qualified wages paid to employees in eligible quarters. Initially, businesses could receive up to $5,000 per employee for the 2020 year. However, in 2021, this amount increased to $7,000 per employee, per quarter. Notably, the eligibility requirements were also relaxed. Unlike the Paycheck Protection Program, the ERC is a valuable refundable tax credit that can provide substantial financial benefits to business owners. The Consolidated Appropriations Act, 2021 (CAA), and the American Rescue Plan Act (ARP) further amended and extended the availability of the credit, including certain advance payments, until September 30th, 2021.
A recent development to consider is the passage and signing of the Infrastructure Bill (H.R. 3684) on November 15th, 2021. As part of this legislation, the Employee Retention Tax Credit (except for the recovery startup business credit) is no longer applicable for the fourth quarter of 2021. However, businesses still have the opportunity to file amended 941 forms for all previous quarters under this program. It is important to take this into account when assessing eligibility and planning for the ERC.
What is the value of the ERC to you?
The value of the Employee Retention Credit (ERC) to employers cannot be underestimated. It provides much-needed cash back into your business with no strings attached, allowing you to use the funds for any business needs. Imagine the competitive advantage of having an extra $200,000 in cash to compensate for wages you have already paid. What would you do with this credit?
As a reminder to business owners, the recently passed $1.5 trillion spending package did not include the Restaurant Revitalization Fund, and the Paycheck Protection Program has ended. It's important to note that the ERC is not a loan but rather cashback that can be utilized without any specific purpose like the PPP.
Furthermore, the IRS is actively increasing staffing to combat PPP fraud, and there are no plans for a PPP 3. The ERC presents an excellent opportunity to benefit from cashback without the constraints or limitations associated with other programs.
“The ERC offers a welcome cash infusion as owners struggle with inflation, rising interest rates and tight labor markets.”
Check your eligibility now
The ERC application provided by ERCredit is designed to be user-friendly and aims to simplify the entire process for applicants. It offers a streamlined and intuitive experience, making it easier to navigate and complete each step with ease.
Free application with no credit impact.