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What is the Employee Retention Credit and how does it work?
The Employee Retention Credit (ERC) is a tax credit that businesses can claim for wages paid to employees who were kept on payroll during the COVID-19 pandemic.
ERC offers a tax credit up to $26,000 per employee for wages paid from March 13, 2020, to December 31, 2021.
Assists businesses in covering employee payroll during tough economic conditions.
Unlike other relief programs like PPP, ERC covers more than just payroll.
Funds can be used for rent, utilities, and various operational expenses.
Businesses can get a tax refund even without tax liabilities, boosting cash flow.
Why ERC Filing Group?
Because we know how to get your ERC refund from the IRS the RIGHT way!
Complimentary Eligibility Assessment
We offer a complimentary eligibility assessment without any obligation, eliminating the need for clients to self-certify.
Strict Adherence to IRS Guidelines
We are committed to authenticity and do not issue misleading “pre-approvals” based on limited information.
Commitment to Authentic Claim Scrutiny
Our eligibility and calculations adhere to IRS Guidelines, avoiding unreliable third-party sources.
100% Refundable Fee Assurance
Should our oversight result in any repayments to the IRS, our fees are potentially 100% refundable.
Benefits of the Employee Retention Credit
The pandemic led to significant staff shortages in many businesses due to layoffs and changing work dynamics. The credit provides additional cash as a tax benefit, facilitating the rehiring of employees.
Originally, Paycheck Protection Program (PPP) beneficiaries couldn’t get the Employee Retention Credit. The Consolidated Appropriations Act of 2021 changed this, allowing PPP recipients to claim the ERC, excluding wages covered by forgiven PPP loans. Remaining wages might qualify for the ERC.
Who Qualifies for the ERC Tax Credit?
Entities like small businesses, startups, nonprofits, corporations, LLCs, and organizations with under 500 employees could qualify for the ERC tax credit. This encompasses a vast majority of US-based businesses spanning numerous industries.
However, companies that transitioned to remote work without altering their operations might be exceptions. Nevertheless, if such companies faced a significant drop in income, they could still be eligible for the ERC.
Who you work with MATTERS!
You can count on ERC Filing Group!
Accuracy
The quality of being correct, true, and exact
Transparency
Frank, open, and candid
Integrity
What we do behind the scenes
Efficiency
We are competent at our job
Honesty
No deceit; no fraud
Tax Savings Examples
Hundreds of employers from a variety of industries have benefited from ERC Filing Group’s ERC services.
How Will the Process Work?
- Data gathering: All we need is 4 pieces of information (# of employees for 2020, # of employees for 2021, paid wages for 2020 and paid wages for 2021) from you so we can calculate your refund and let you know how much money you’re due back.
- Credit calculation: We’ll leverage our expertise to determine the precise credit amount you can claim from the IRS.
- Amending returns: We’ll in prepare and file the amended 941-X payroll returns for you.
- Get paid: The IRS will process your credit and mail you a check.
Top Mistakes to Avoid
- Not properly documenting your qualified wages. To claim the ERC, you must be able to document the qualified wages that you paid to your employees.
- Claiming wages that are not qualified. Not all wages are qualified for the ERC. For example, wages paid to employees who are not full-time or who are not working in the United States are not qualified.
- Not filing your Form 941-X by the due date. The Form 941-X is the form that you use to claim the ERC. The due date for filing the Form 941-X depends on the quarter in which you paid the qualified wages.
- Not working with a professional. The ERC is a complex tax credit, and it is important to work with a professional like ERC Filing Group to ensure that you are claiming it correctly.
Helpful Employee Retention Credit FAQs
There are many factors involved such as revenue reduction, business shutdown, eligible employees, etc. Our team can help you evaluate your eligibility by collecting some information from you via our ERC Questionnaire.
No, this is a refundable tax credit and not a loan. We request a refund check for you when we file your ERC claim.
Maybe. Wages of owners who have majority ownership, defined as over 50%, do not qualify, nor do the W2 wages of any immediate family members of the owner. In the case where an owner has less than 50% ownership, their W2 wages qualify, as do the W2 wages of immediate family members.
While both PPP and ERC are part of the CARES Act, there are some notable differences: the PPP was structured as a forgivable loan through your local bank via the SBA; the ERC is a payroll tax credit through the IRS – it is not a forgivable loan; it is cash for you to do whatever you choose. The PPP had a specific funding amount and PPP funds ran out; ERC funds don’t run out, you just have to claim your credit prior to the end of the 3 year lookback period.
ERC “Version 1” went live in March of 2020 but was mostly ignored due to the focus on PPP. However in December 2020, the Government updated the law with the release of ERC “Version 2” through the Consolidated Appropriations Act. Under Version 2, employers were both retroactively and prospectively allowed to take both ERC and PPP (Round 1 and 2). Version 2 also extended the credit into Q1, Q2 and Q3 of 2021 and increased the field of eligible employers by allowing companies with up to 500 employees to take the credit, up from 100 for 2020. In short, it was a huge expansion of eligibility which opened up a significant opportunity for hundreds of thousands of businesses in the US.
Revenue reduction is only one of a few ways that qualifies or disqualifies a business from ERC. If you can demonstrate interruption in business operations in each quarter, we can help you document and present to become qualified for the ERC.
Wages/compensation, in general, that are subject to FICA taxes, as well as qualified health expenses will qualify when determining the Employee Retention credit. Payment must have been made after March 12, 2020 and qualify for the credit if paid through Dec 31, 2021.
All eligible employers will receive the funds. Tax refunds are issued by the U.S. Treasury. This is not a lending program.
Yes! Before the Consolidated Appropriations Act (CAA) was passed in December 2020, businesses could not claim ERC if they had accepted a PPP loan. With the updated CAA, businesses are eligible in 2021 even if they claimed a Paycheck Protection Program loan.
Currently, the IRS is not providing any estimates related to the timing of Employee Retention Credit receipt. However, they have indicated that there are over 1.8 million paper payroll tax returns in the queue with the IRS. Our best guess is that you’ll be waiting 6+ months from the filing date of your claim.