Frequently Asked Questions

The Coronavirus Aid, Relief, and Economic Security Act (also known as the CARES Act) was signed into law on March 27, 2020. It included two programs to assist businesses with keeping workers employed: the Payroll Protection Program (PPP) administered by the Small Business Adminstration and Employee Retention Tax Credit (ERTC) administered by the Internal Revenue Service.

PPP funds are distributed based on 2.5 months of payroll and a minimum of 80% of the funds must be used on payroll to be eligible for forgiveness. Additionally, PPP funds are not taxable as revenue and you may still take deductions for the payroll covered by PPP.

ERTC tax credits, however, are credits (or refunds) for a percentage of payroll in each quarter that you qualify. There are specific rules for determining eligibility by quarter, and limiting the dollars that can be claimed for each employee.

Initially with the CARES Act, employers could choose to apply for PPP or claim ERTC credits, but not both.

PPP was more beneficial than ERTC for most businesses (for reasons we won’t go into here) and so most businesses with under 500 employees received forgivable PPP Loans.

On March 11, 2021, The American Rescue Plan Act of 2021 was signed into law and included many modifications and expansions to existing elements of previous stimulus programs.

Noteworthy modifications for business owners included:

Businesses who applied for and received PPP funds could now also claim ERTC credits.
ERTC credits could be retroactively claimed for businesses that qualified in 2020.
ERTC credits were extended through 9/30/21 with lower qualification requirements.
The per-employee cap on qualifying wages increased from $10,000 for all of 2020 to $10,000 per quarter for the first 3 quarters of 2021.
The refundable credit amount increased from 50% of qualifying wages in 2020 to 70% in 2021.
So the short answer is “Yes” . . . you can claim ERTC even if you received PPP funds.

Unlike the Payroll Protection Program (administered by the Small Business Administration), there is actually no “application process” for the Employee Retention Tax Credits.

You simply claim the ERTC tax credit like you would any other tax credit – by asserting to the IRS that you can legally claim the credit.

When you claim a child tax credit, you do so by asserting this fact on your Form 1040 Personal Income Tax Return.

The difference is that when you claim an ERTC tax credit, you do so on your Form 941 Employer Quarterly Tax Filing.

For prior quarters, you must file an amended form (the Form 941-X) to reduce your current quarter’s tax contribution and request a refund of excess credits (which is highly likely).

Another perk of ERTC, is that since you can often estimate these credits in advance of distributing cash for payroll, you can file a Form 7200 to receive a cash advance to avoid waiting until the end of the quarter to apply for the refund.

The short easy answer is to:  RUN AWAY.  They will not be there to protect you should you face an IRS audit!

Obtaining an opinion letter from an attorney can be a critical tool in defending your eligibility for the credit during an audit. An opinion letter is a written statement from an attorney that explains the legal basis for your eligibility for the credit and provides a detailed analysis of the relevant legal issues.

Given the complex and rapidly evolving nature of tax laws and regulations, obtaining an opinion letter from an experienced tax attorney is strongly recommended. An attorney can review your specific circumstances and provide you with an informed and detailed legal analysis that is tailored to your business. They can help you identify potential legal issues that may arise during an audit and provide guidance on how to address them. This can be particularly important if your business is large or has complex tax issues.

While obtaining an opinion letter may involve additional costs, the potential benefits of having one in defending against an IRS audit can far outweigh the costs. By providing a legal opinion that is both detailed and persuasive, an opinion letter can help to prevent an audit from turning into a prolonged and costly legal battle. Additionally, the mere fact that you have obtained an opinion letter can demonstrate to the IRS that you have taken proactive steps to ensure your compliance with the law and may help to deter any further inquiry.

Short Answer:  YES!
 

I do ask if you only have 2-4 employees to give me a phone call or send us an email instead of the phone call.  Here is the information you need:

Phone:  814-231-1201

Email:  Contact@ERTC.Expert

Good news!  Yes, we can help 95% qualify, so do give Marshall a call at the above number.

Even though you may feel like revenue is back to normal, there are some items you want to consider before passing on this ERTC assessment.

First, even if revenues have returned to “normal” in 2021, you may have qualified in 2020 and you can retroactively claim those credits. That eligibility criteria in 2020 was based on revenue declines from 2019, or if your business was partially or fully closed due to governmental mandate.

Second, while your revenue may have returned to “normal” in Q1 2021, remember that we are comparing your Q1 2021 to Q1 2019. If 2019 was a year of growth for your business, then your revenue levels 2 years ago may have been much less than Q1 2020.

And lastly, if your revenues were down in Q4 2020 by just 20% compared to Q4 2019, then you may also be eligible for Q1 2021. There is a safe harbor provision that few advisors are talking about, and it means that many businesses are qualifying for $7,000 per employee in Q1 2021.

I know, it seems too good to be true, but the government wants to incentivize and reward you for keeping US residents employed and money flowing through our economy as we rebuild bigger and stronger than before.

You are most likely referring to a provision of the CARES Act that allowed employers to defer the deposit and payment of the employer’s share of Social Security taxes. Those deferrals must then be repaid – with at least 50% of the balance due by 12/31/21 and the remaining balance due by 12/31/22.

ERTC credits are NOT a deferral. They are dollar-for-dollar credits against wages you’ve paid. Not taxes you’ve paid, but actual wages.

These credits can offset future tax contributions or you can receive a refund check – it’s your choice.

And you will NOT have to re-pay these funds (unless, of course, you don’t provide adequate documentation in the course of an audit).

Your banker, CPA, or Financial Advisor was probably very helpful when it came to getting your PPP funds because they were effectively signing you to an SBA-guaranteed loan. The SBA paid the bank administrative fees based on the PPP loans they made, and so they were incentivized to educate you about the program and get all your paperwork in order.

Compared to the ERTC, the PPP program was also a rather simple calculation. 2 ½ times your average monthly payroll including health insurance and state unemployment taxes.

From the conversations we’ve had with bankers, they have no interest in involving themselves in your employment tax compliance. For them it is a liability and beyond their scope of services.

Your Payroll Service does an excellent job of executing the fundamentals of paying your employees, paying your employment taxes and filing your quarterly reports.

But computing your ERTC credits requires visibility into your P&L and PPP forgiveness applications. Not only that, but the complex requirements around eligibility and allocating ERTC credits at the employee-level while accounting for annual and quarterly qualifying wage gaps and . . . well, you can probably tell why Payroll Services are not offering to do all of this for you.

The Payroll Services that we’ve worked with so far are happy to provide the payroll registers that we need to perform the allocations. And they are happy to file the Amended Form 941-X with the IRS on our client’s behalf.

But that’s the extent of it.

In fact, most wise Payroll Services are asking clients to sign an indemnification waiver before submitting a Form 941-X because the Payroll Service can take no responsibility for the accuracy of the ERTC credits you are claiming.

For them to involve themselves in the intricacies of this calculation, it is a liability and beyond their scope of services.

Whether your tax accountant is a CPA or EA, he or she most likely only prepares your Federal and State Income Tax Returns. However, ERTC credits are claimed against Employment Taxes on Form 941, and cash advanced through Form 7200.

The complexity of the ERTC program is a beast unto itself and every tax accountant we’ve talked to has said they focus on staying up-to-date on the ever-evolving income tax code, and they can’t now become experts in the ERTC program as well.

If your tax accountant is comfortable determining your eligibility by quarter and year, computing your credits, and preparing contemporaneous documentation to support an IRS audit, then you should certainly let them handle all of this.

If you want a second set of eyes on this, we’re happy to take a look.  Click on any of the links we have provided to schedule your No-Obligation pre-qualification call with one of our attorneys.

Your Bookkeeper should certainly have access to all the information that is needed for an accurate calculation of your legal ERTC claim. They will have your financial reports, payroll registers, and PPP loan forgiveness documents.

The Million Dollar Question is . . . Do They Have The Time?

• Do they have the time to dig into the text of American Rescue Plan Act of 2021
• And its accompanying referenced laws like: CARES Act, Families First Act, Payroll & Healthcare Enhancement Act, PPP Payroll Flexibility Act and the Consolidated Appropriations Act. 
• Time to read the IRS Interpretations and FAQ’s? And cross-reference those definitions with that of PPP which was separately defined and dissimilarly interpreted in the Small Business Administration’s Bulletins and IFRs?
• Do they have the time to ensure accuracy in eligibility determination, maximize your computation and create the supporting documentation you’ll need to support an IRS audit of employer taxes?

So far, we have not found a bookkeeper who is able to take all this on, while handling the day-to-day of bookkeeping. If yours can, then take them up on their offer. We’re happy to take a second look.

To Book your FREE Pre-Qualification 10-15 minute phone call click on the link below: 

Click on this booking link:  https://app.lawmatics.com/forms/share/e74222ae-65e3-42ee-baab-368be940bb00 

NOTE:  This money does not have to be paid back, ever.

We can tell you in 10 Minutes if your business qualifies for this tax credit, because we’ve set up our Consultations to be as quick and efficient as possible.

• You don’t need to prepare for this Consult
•  You don’t need to bring any revenue information
• We’ll simply talk about your business, to see if you were affected by the COVID-19 pandemic and government shutdown orders
• This only takes 10 Minutes

All you need to do is click here on this link:   https://app.lawmatics.com/forms/share/e74222ae-65e3-42ee-baab-368be940bb00    and we’ll set up a time to discuss if you qualify for this tax credit… 

We’ll quickly be able to tell you whether or not we can help your business…and if we can’t help you, there is no fee.

We’ll get some basic background information…

• What type of business you have
• What type of law you practice (if you have a law firm)
• How many employees you have
• What you’re going to do with all the extra money you get (just kidding)

This government program is set to expire, and once it’s gone…it’s gone forever.