Employee Retention Tax Credit FAQ
This information is not intended to offer advice, but rather general information. You should consult with a qualified tax professional to learn more about it and determine if your business is eligible.
CAN I QUALIFY FOR ERC IF I’M A 1099 CONTRACTOR?
Unfortunately, no. This program is only for companies that paid W2 wages to non-owners.
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.
DO WE STILL QUALIFY IF WE ALREADY TOOK THE PPP LOAN?
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.
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. Items are considered as changes in business operations, including shifts in job roles and the purchase of extra protective equipment.
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 a 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 are different for 2020 and 2021, but are measured against the current
quarter as compared to 2019 pre-COVID amounts.
If you feel you qualify, consult with a qualified tax professional to learn more and determine if your business is eligible.
Seven Ways to Avoid Employee Retention Credit Scams
- Be Wary of Any Inquiry You Receive
- Contact the IRS When in Doubt
- Fully Vet Any Service You Use
- Learn the Basics of the ERC
- Ask About Audit Defense Services
- Ask for Clarity About Pay Structure
- Report Scams to the IRS
You can forward these emails directly to the IRS at firstname.lastname@example.org or call the IRS at 800-829-1040. You can report IRS imposter scams to the Treasury Inspector General for Tax Administration by calling 800-366-4484.
The best way for businesses to protect themselves against scams involving tax credits is both simple and effective: Do your due diligence before hiring any advisors, keep personal information secure at all times, and don’t fall victim to promises of easy money or quick returns. Employee Retention Credit scams can have serious consequences for businesses, so you need to protect yourself. Talk to an ERC professional who can help you navigate the process.