What Types of Businesses are Eligible for ERTC in 2021? 

 December 15, 2023

By  Jace W Campbell, CPA

Types of Businesses are Eligible for ERTC in 2021

Understanding who is eligible for the Employee Retention Credit (ERTC) in 2021 is crucial for business owners and non-profit organizations… In simple terms, almost every type of business and non-profit organization in the U.S can claim the ERTC… This credit applies as long as they had W-2 employees on their payroll during the pandemic and paid payroll taxes on those employees.

The Employee Retention Credit was designed to encourage businesses to keep employees on their payroll despite facing economic hardships related to COVID-19. However, as we delve deeper into the subject, we will see that eligibility isn’t as straightforward as it might initially appear..

How Confident Are You In Your ERTC Eligibility?

Watch Our Video Explaining the Fraud We’ve Seen From National ERC Promoters

The Specifics of ERTC Eligibility

Eligibility for ERTC largely depends on two main factors:

Unpacking the ‘Significant Decline in Gross Receipts’ Criteria for ERTC

To understand ERTC eligibility, one key factor to consider is whether your business experienced a significant decline in gross receipts. But what constitutes a significant decline? IRS.gov clarifies this by stipulating that an employer can qualify if its gross receipts are less than 80% of the same quarter’s gross receipts from 2019…

To break it down, for most businesses, ‘gross receipts’ essentially equates to gross revenue. So, if we put this into simple terms, if your gross receipts in Q1 or Q2 or Q3 of 2020 were less than 50% of the same quarter in 2019 – you qualify for ERTC…

Interestingly, this criterion adjusts slightly for subsequent quarters. If your gross receipts in Q4 of 2020 or Q1 or Q2 or Q3 of 2021 were less than 20% of the same quarter in 2019 – then you qualify again. This might seem a bit tricky since we’re including Q4’20 into that second sentence. The reason behind this complexity stems from IRS’s defined safe harbor election that allows businesses to claim additional quarters.

The guidelines for determining eligibility based on the decline in gross receipts aren’t as straightforward as they could be… In fact, it seems like these provisions were intricately designed with legal expertise as they are far more confusing than one would expect them to be…

Furthermore, it’s important to note that not only does the percentage decrease change between 2020 and 2021, but so does your qualifying period after suffering a decline in gross receipts.

Henceforth, interpreting and applying these rules correctly becomes crucial. Understanding these complexities and how they apply to your unique situation is paramount because ultimately, you are responsible for these tax credit claims. Having expert guidance can make navigating through this maze much easier and ensure you maximize your ERTC claim while remaining compliant with regulations.

Also read: Refundable vs Nonrefundable: What is the difference for ERTC?

Government-Mandated Full or Partial Suspension of Operations

Alternatively, a business may qualify if it was subject to a government order that resulted in a full or partial suspension of operations. This includes orders from both local and federal authorities…

But what does this mean practically? It means even if your business wasn’t completely shut down by governmental orders but was significantly impacted, you could still be eligible for ERTC.

Understanding these intricacies and how they apply to your unique situation is paramount because ultimately, you are responsible for these tax credit claims.

How Much Can You Claim?

The amount you can claim through ERTC also underwent changes in 2021… Previously, for 2020, the maximum credit was 5,000 per employee. But now, for 2021, you can claim up to 7,000 per employee per quarter… This means that a significant amount of funding is available for businesses who qualify.

In light of the recent IRS crackdown on ERC promoters and their efforts to curb ERTC fraud, it’s crucial to work with trusted advisors who understand the complexities involved in ERTC…

Why Choose JWC ERTC Advisory?

When it comes to navigating the complex waters of ERTC, engaging with JWC ERTC Advisory can be beneficial… The world of tax credits can be fraught with uncertainty and fear. But by working with JWC ERTC Advisory, you gain peace of mind knowing that your eligibility and claims are handled correctly and ethically.

Taxpayers who have previously filed for ERTC but have questions or are skeptical about their eligibility for the credits can engage JWC ERTC Advisory for an independent eligibility review… This helps ensure you’re maximizing your claims while remaining compliant with regulations.

In conclusion, whether you’re just starting your journey into understanding ERTC or a seasoned CPA looking for efficient ways to serve your clients ethically — remember: knowledge is power. With JWC ERTC Advisory on your side, you have a trusted partner to guide you through these intricate processes.

Jace W Campbell, CPA

Jace founded JWC ERTC Advisory CPA in March 2021 as the nation's first and only public accounting firm focused solely on ERC . . . and nothing else. He has personally signed over 9,000 ERTC claims and is proud to be executing these claims conservatively, and how intended by Congress.

He has a passion for educating clients so they can make the best decision for themselves.  If you read articles and watch videos that Jace produced in 2021, his approach is the same now as it was then.

While other firms pivot their messaging to comply with new IRS guidance, Jace continues preaching the same conservative principles that have helped clients recover hundreds of millions . . . while sleeping easy at night.

related posts:

Can You Claim Employee Retention Credit in 2023?

Can You Claim the Employee Retention Credit in 2022?

Employee Retention Credit Scams: What You Need to Know

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