The Most Frequently Asked Questions About ERTC 

 December 13, 2023

By  Jace W Campbell, CPA

Frequently Asked Questions About ERTC

The Employee Retention Credit (ERC) is a pivotal component of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act)… A tax relief measure designed to help businesses keep their employees on payroll during these unprecedented times. This provision is indeed complex with a myriad of details and requirements… So, let’s break it down.

What exactly is the ERTC?

Introduced in March 2020, as part of the CARES Act… The Employee Retention Credit was devised to support businesses suffering economic hardship due to COVID-19. The credit provides immediate funds by reducing federal employment tax liabilities… However, comprehending its details can be a tad complicated.

Essentially, this refundable tax credit goes against certain employment taxes equal to 50% of the qualified wages an eligible employer pays to employees after March 12, 2020, and before January 1, 2021… Later extended through December 31, 2021. It’s vital to understand though… Each employer’s circumstances are unique so not all may qualify for this benefit.

Eligibility for the Employee Retention Tax Credit: Unraveling the Complexities

Understanding who qualifies for the Employee Retention Tax Credit (ERTC) and how to do so can indeed be quite challenging. The ERTC was established with the intention of aiding businesses negatively impacted by COVID-19… But navigating its criteria can feel like traversing a labyrinth.

First, it’s important to note that eligibility hinges on specific criteria. For instance, businesses must have experienced either a partial or full suspension of operations due to governmental COVID-19 orders, or a significant decline in gross receipts… But let’s dig deeper.

The number of full-time employees an employer had in 2019 also plays a crucial role. If there were more than 100 employees on average, only those wages paid during business suspension or periods of significant decline in gross receipts qualify for ERTC. However, if there were fewer than 100 employees on average, all employee wages might qualify.

But what about businesses with over 500 full-time employees? Such entities have likely already engaged professional accounting services for ERTC claims particularly if they had to pay employees to stay at home and not work during periods of business suspension.

Once you’ve determined you are an eligible employer for either 2020 or 2021, you need to figure out when exactly you qualify… And this is where it gets tricky.

Determining qualifying periods involves another subjective criterion – significant decline in gross receipts. If your business meets this criterion in any quarter, you will qualify for the entire quarter. Thus, all wages paid during that qualifying quarter can be utilized when calculating credits.

But what constitutes a “significant” decline? For 2020, it meant experiencing over a 50% drop in any quarter compared to the same quarter in 2019. In contrast, for 2021 the threshold was reduced – now only requiring a 20% decline. Interestingly, this decline in gross receipts didn’t need to be directly tied to the pandemic… It’s purely a mathematical test.

This eligibility review often proves to be a stumbling block for many businesses. However, it’s essential to remember that help is available. Professional advisory services can provide much-needed assistance in navigating these complexities, ensuring you maximize your benefit from ERTC while staying compliant with the rules.

The Role of ERTC Advisory Services

Navigating the complexities of the ERTC can be daunting… Here’s where a competent ERTC Advisory service such as JWC ERTC Advisory CPA can prove invaluable. They possess expertise in deciphering complex tax laws and can assist businesses with an independent eligibility review… Ensuring they rightfully benefit from this provision without violating any rules.

Deceptions by Unethical Firms: What to Look Out For?

Beware though… Not all advisory services are equal. There are firms employing unethical tactics, selling misleading information about the ERTC to unsuspecting businesses. They entice with promises of substantial tax credits often overlooking crucial eligibility criteria… It’s crucial to remain vigilant against these deceptions.

Remember, you, as the business owner, bear ultimate responsibility for these tax credit claims… Any missteps could result in penalties from the IRS. It’s vital to engage a reputable advisory firm that values ethical conduct above all.

Why Choose JWC ERTC Advisory CPA?

In light of recent IRS crackdowns on ERC promoters and efforts to curb ERTC fraud, engaging a trustworthy and knowledgeable advisory firm like JWC ERTC Advisory CPA is more crucial than ever. With their comprehensive understanding of the ever-evolving landscape of tax laws and dedicated approach towards client welfare, JWC assures businesses stay compliant while maximizing their benefit from the Employee Retention Credit.

Choosing JWC means working with experienced professionals who understand your fears and uncertainties regarding tax credit claims. Their personalized approach ensures you receive advice tailored specifically for your business situation, offering potential gains not only in immediate financial relief but also long-term stability during uncertain times.

In conclusion… The Employee Retention Credit offers significant aid for businesses impacted by COVID-19. However, its complexities warrant caution. Ensure you seek guidance from reputable experts such as JWC ERTC Advisory CPA… After all, when it comes to navigating complex tax credits, expert guidance can make all the difference.

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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