Robert W Morris & Company PC

The Employee Retention Tax Credit (ERTC) is one of the largest government stimulus programs in history that provides a cash payment of up to $26,000 per employee. As a result, the ERTC is on many business owners’ minds. Originally introduced as part of the CARES Act, it was intended to encourage employers to keep employees on the payroll as they navigated the unprecedented effects of COVID-19.

Since its inception, the rules around eligibility have changed several times and are often misunderstood. This means that even if you weren't eligible before, if you have W-2 employees, you are likely able to take advantage of this valuable resource.

For 2020, the credit is 50% of qualifying wages paid, up to $5,000 per employee. For 2021, the credit is 70% of qualifying wages paid, up to $7,000 per employee per quarter. A small business could be eligible for up to $26,000 per employee.

A WORD OF CAUTION: There are several companies offering to calculate ERC in exchange for a large percentage of the “take.” Due to the limited IRS guidance on the subject, some are taking a very liberal interpretation of the rules. They are not wrong in all cases, but many are interpreting the law in a way that is not accurate. And in some cases, there are some bad actors that are committing outright fraud. The IRS Criminal Investigation division has raided a raided an shut down a number of these businesses suspected of fraudulently preparing credit claims. If you are approached by a company offering something that sounds too good to be true, it probably is! Here are a few things to be on the lookout for:

·         Guaranteeing you won’t be audited.

·         Promising the maximum credit without providing you with a questionnaire.

·         The promoter was not in existence before 2020.

·         Their engagement letter puts all the liability on you.

·         They won’t sign off as a paid preparer on your amended employment returns.

As with all complex tax issues, we are here to help! Complete our quick (60 second) ERTC quiz so that we can help you determine your eligibility. You can also find some more details about this valuable credit by visiting our ERTC page. As always, do not hesitate to reach out with any questions. This is a great program for small businesses, and we want to help our clients take advantage of it.