National ERC grant

National ERC grant ERC is a stimulus program designed to help those businesses that were able to retain their employees during the Covid-19 pandemic.

Established by the CARES Act, it is a refundable tax credit – a grant, not a loan – that you can claim for your business

08/09/2022

Do we still qualify if we remained open during the pandemic?

Yes. To qualify, your business must meet either one of the following criteria:

Experienced a decline in gross receipts by 20%, or

Had to change business operations due to government orders
Many items are considered as changes in business operations, including shifts in job roles and the purchase of extra protective equipment. The ERC, in this case, also applies only for Q3 and Q4 of 2021. Businesses can qualify, regardless of the number of full-time employees.

08/09/2022

Do we still qualify if we did not incur a 20% decline in gross receipts?

Your business qualifies for the ERC, if it falls under one of the following:

A government authority required partial or full shutdown of your business during 2020 or 2021. This includes your operations being limited by commerce, inability to travel or restrictions of group meetings.

Gross receipt reduction criteria is different for 2020 and 2021, but is measured against the current quarter as compared to 2019 pre-COVID amounts.

08/09/2022

Do we still qualify if we already took the PPP?

Yes. Under the Consolidated Appropriations Act, businesses can now qualify for the ERC even if they already received a PPP loan. Note, though, that the ERC will only apply to wages not used for the PPP.

08/09/2022

What period does the program cover?

The program began on March 13th, 2020 and ends on September 30, 2021, for eligible employers.

You can apply for refunds for 2020 and 2021 after December 31st of this year, into 2022 and 2023. And potentially beyond then too.

We have clients who received refunds only, and others that, in addition to refunds, also qualified to continue receiving ERC in every payroll they process through December 31, 2021, at about 30% of their payroll cost.

We have clients who have received refunds from $100,000 to $6 million.

08/09/2022

How is PPP subtracted or accounted for?

We can’t use wages covered by PPP loans and apply them to ERC. There is a “no double-dipping” rule governing the interplay of an employer’s forgiven PPP loan and its eligibility for ERC.

08/09/2022

Will I get audited?

As with any fillings that are done with the IRS there is always a chance that you can get audited, however with the volume that the IRS is processing and their short staff levels it is highly unlikely, the audit rate for employment related tax returns for the last year that the data was available for was under 3 per 10,000 returns. In the unlikely event that you do get audited, while we can’t represent you we will assist by providing all of the supporting documentation to back up the work that we did.

08/09/2022

Is it Taxable?

Yes it’s a professional fees expense.

08/09/2022

Is the commission paid to BLC a tax deductible expense?

Yes, for example if a company’s ERC refund was $100 and BLC commission was $30 then the company would lose taxable expense deductions for the net $70 and the net effect would be an increase to its taxable income.

08/09/2022

Is refund considered taxable income?

The refund is a deduction in the payroll expense for the period that the credit is for. The interest that the IRS pays on the credit is considered taxable income in the period that the payment is received.

08/09/2022

What qualifies as operational changes?
Here are some impacts to consider that qualify your business for the Employee Retention Credit:

Change in business hours

Partial or full suspension of your operations

Shutdowns of your supply chain or vendors

Reduction in services offered

Reduction in workforce or employee workloads

A disruption in your business (division or department closures)
Inability to visit a client’s job site

Suppliers were unable to make deliveries of critical goods or materials

Additional spacing requirements for employees and customers due to social distancing

Change in job roles/functions

Tasks or work that couldn’t be done from home or while

transitioning to remote work conditions

Lack of Travel

Lack of Group Meetings

08/09/2022

I took PPP, do I still qualify?

Under section 206(c) of the Taxpayer Certainty and Disaster Tax Relief Act of 2020, an employer that is eligible for the employee retention credit (ERC) can claim the ERC even if the employer has received a Small Business Interruption Loan under the Paycheck Protection Program (PPP).

08/09/2022

No revenue decline, do I still qualify?

There are two ways to qualify; EITHER a change in your operations OR a revenue decline. You do not need a revenue decline to qualify, in fact many businesses had a revenue increase and still qualified.

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Portsmouth NH 325 Corporate Drive Portsmouth
Los Angeles, CA
03801

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