What are the Requirements for Claiming ERTC? 

 November 30, 2023

By  Jace W Campbell, CPA

Requirements for Claiming ERTC

The Employee Retention Credit (ERTC) is a refundable tax credit that provides financial relief to businesses… It’s designed to encourage businesses to keep their employees on payroll. But understanding the requirements can be tricky…

What are the ERTC Requirements?

According to IRS.gov, to qualify for ERTC, employers must meet specific criteria… Firstly, they must have experienced either a full or partial suspension of their operations due to government orders related to COVID-19… Secondly, they should have experienced a significant decline in gross receipts.

Additional Eligibility Factors

Apart from the primary conditions related to business operations and gross receipts, there are other variables that play into ERTC eligibility… According to our Ultimate Guide to ERTC, two key additional factors are the size of the employer and wages paid during certain periods.

When we talk about employer size, it refers to the average number of full-time employees a business had in 2019. As discussed earlier, the threshold of 100 employees separates small businesses from larger ones, with different rules applying to each… This can significantly impact the amount of credit a business qualifies for.

The factor of wages paid during certain periods also has considerable implications for ERTC eligibility… It is not just about how much was paid in wages but also when these payments were made.

Only wages paid during periods when businesses experienced either a full or partial shutdown due to government orders or significant decline in gross receipts qualify for the credit… The timing of wage payments, therefore, is as important as the amount itself when claiming ERTC.

These additional factors highlight how complex and multifaceted ERTC eligibility requirements are… They underscore why understanding them thoroughly is essential for accurate and successful claims.

Understanding the Impact of Employer Size on ERTC

When it comes to the Employee Retention Credit (ERTC), the size of your workforce plays a crucial role in determining eligibility and credit amount… Different rules apply depending on whether your business had more or less than 100 full-time employees during 2019.

For businesses with 100 or fewer employees in 2019, all employee wages paid during eligible quarters could qualify for the credit… This is irrespective of whether these employees provided services. It’s a rule designed to help smaller businesses maintain their workforce…

On the other hand, businesses with more than 100 employees in 2019 face a different scenario… For them, only wages paid to employees not providing services during eligible quarters qualify for the credit. This emphasizes supporting businesses where operations have been significantly disrupted.

It’s important to note that ’employee’ here refers to any individual who is employed full time by the employer… Part-time and seasonal workers are treated differently for purposes of this credit. Understanding these nuances can make a significant difference in your ERTC claim.

This aspect of ERTC underscores how intricately designed this tax credit is… It aims at providing relief to all sizes of businesses while also taking into account their varying capacities and challenges.

How Wages Paid Impact ERTC Eligibility

The timing and amount of wages paid also factor into eligibility. Employers can only claim credits for wages paid during periods of business suspension or decline in gross receipts…

As the recent crackdown by the IRS shows, proper understanding and application of these requirements are essential… The IRS has been focusing its efforts on curbing fraud related to ERTC claims.

As an entrepreneur navigating these requirements can be daunting… That’s where professional advisory services come in handy. One such firm is JWC ERTC Advisory CPA, renowned for its deep expertise and integrity…

Why Choose JWC ERTC Advisory CPA?

In this uncertain climate, having a reliable partner like JWC is invaluable… They provide an independent eligibility review even if you’ve previously filed for ERTC. They guide businesses through the complexity of ERTC, eliminating fear and uncertainty…The benefits of working with JWC ERTC Advisory CPA go beyond compliance… They help you maximize your ERTC benefits while minimizing potential risks. In the face of uncertainty, make the wise choice… Let JWC guide you towards your rightful benefits.

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

Easy to Start. Even Easier to Finish.

The tax code is complicated enough for CPA's - no need to complicate this process for you as well. That's why we've created The 15 Minute Refund™.

Simply register here and we'll provide your team access to your online portal where documents can be uploaded.

We're not kidding when we say this will take less than 15 minutes of your time.

We'll get you all the deets and the engagement letter to your inbox so we can start immediately.

Register Now