Have questions about the Employee Retention Tax Credit? You’re not alone. Though the program has been around for a while now, its complexity hasn’t changed. And for business owners, every new iteration of rules, guidance and announcements brings more questions and confusion. But never fear, ERC Specialists is here to help you unravel and interpret it all!
One of the most frequent questions we get is: Did the ERC credit end in September 2021?
Let’s discuss the program end date as well as the steps you can take now to ensure you receive the most tax benefits available to you.
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ERC Tax Credit Program Ends, Now What?
While the ERC program ended September 30, 2021, you can still submit and apply for credits for up to three years after when your IRS Form 941s were filed. That’s right, eligible businesses can still apply for stimulus funds based on your financials between March 13, 2020 and Sept. 30, 2021.
That’s great news for many small business owners who are still struggling to get their full ERC benefits.
While there are many nuances involved in the program, we encourage every business to evaluate the opportunities available to them. However, many small business owners still don’t understand those nuances and may be hesitant to take on such a complex program.
That’s a mistake that leaves money on the table. ERC Specialists is here to help ensure you don’t miss out on your share of the ERC tax benefits you deserve.
History of the ERC Tax Credit
The Employee Retention Tax Credit (ERC) was created by the Coronavirus Aid, Relief and Economic Security (CARES) Act and became law in March 2020. The goal of the program is about the only thing that’s clear to many business owners: To encourage small businesses to retain employees during the pandemic. Simple! And wise. But there’s more.
The Consolidated Appropriations Act of 2021, which was enacted in December 2020, and the American Rescue Plan Act (ARPA), enacted in March 2021, amended and extended the ERC tax credit as well as the opportunity to receive some advance payments through the end of the year 2021.
On Nov. 15, 2021, President Joe Biden signed the Infrastructure Investment and Jobs Act into law, and the Employee Retention Credit end date was switched from Dec. 31 to Sept. 30, 2021 (for businesses other than ARPA Recovery Startup Businesses).
Qualifying for the ERC Tax Credit
The eligibility requirements for receiving ERC funds are many, and sorry folks, these aren’t especially clear either. You may be qualified to earn the ERC credits if your business has experienced a partial or complete suspension of operations. Of course, that leaves a lot of room for ambiguity. Things like capacity impacts due to social distancing requirements, reduced hours of operation, supply chain disruptions and delays are all qualifying events.
You may also qualify if your business has experienced a significant reduction in revenue during any quarter of 2020 or 2021 as compared to 2019. In 2020, it must be a 50 percent decrease in revenue per quarter, and in 2021, a 20 percent decrease per quarter.
Get Your ERC Tax Credit Now
The ERC tax credit is a refundable payroll tax credit you can claim quarterly to realize a reduction in your payroll taxes or receive cash refunds.
While it’s difficult to understand and not every business is in a position to study tax codes and payroll deductions enough to be familiar with its provisions, ERC Specialists can help you determine if you are eligible for it and ensure you received the maximum benefit available to you. That amount is based on the number of employees you have and how many quarters your business is qualified.
Further complicating matters, there are different rules for 2020 and 2021.
For wages paid after March 12, 2020, and on or before Dec. 31, 2020, the credit is equal to 50 percent of qualified wages. This equals a $10,000 maximum payout per employee. Your tax credit would be $5,000 for the year 2020 based on this scenario.
For wages paid Jan. 1, 2021, through Sept. 30, 2021, the credit is even more — up to 70 percent of qualified wages. However, the $10,000 maximum payout per employee is evaluated for each quarter. Therefore, the maximum credit is $7,000 per quarter, which equals $21,000 for three quarters. It is not calculated annually.
The bottom line may be hard to see at this point. That’s why ERC Specialists are here. Despite the ERC credit ending in Sept. 2021, the takeaway is that you can still submit and apply for ERC tax credits for up to three years after when your IRS Form 941s were filed. Contact us today to get the most small business tax relief ERC tax benefits available to you.