Companies can no longer pay salaries to qualify for the Employee Retention Credit (ERC), but they have until 2024 and, in some cases, 2025, to analyze their payrolls during the pandemic and apply for the credit retroactively by filing an amended tax return. The answer to this question is a resounding “Yes”. Regardless of the size of your business, you can apply for the ERC. This applies to both commercial and business entities, as the IRS considers them to be the same type of business.
The only types of businesses that don't qualify to apply for the CARES Act or the Employee Retention Credit are federal, state and local government entities. You can apply for the CARES Act right away to keep your employees working, even if your company is severely affected this decade. For an employer that qualifies for the ERC under the requirement of a government order, business operations must be fully or partially suspended during the corresponding calendar quarter due to a government order that limited commerce, travel or group meetings due to COVID-19. The ERC has numerous complexities that can make it difficult for employers to understand its requirements. However, employers can take full advantage of the ERC and its benefits by relying on up-to-date technological solutions in combination with tax credit specialists who help employers identify if they are eligible, request the full amount of the credit and ensure proper payroll tracking and documentation.
Although a large number of employers who were otherwise eligible for the ERC did not apply for it, they still have time to file amended payroll tax returns and take advantage of it. Before filing a claim with the ERC, employers must fully understand their background and best practices in order to prepare for a possible IRS ERC audit. Filing an application for an employee retention credit requires that you gather as much evidence as possible to determine how your company was affected by COVID-19. Like most business tax incentive programs for economic development, the employee retention credit has certain complexities that can affect the receipt of an accurate, optimized and audit-ready number. The federal government established the Employee Retention Credit (ERC) to provide a refundable employment tax credit to help businesses cover the cost of keeping staff employed.
If your company has experienced a 50% or more reduction in gross revenues, you may qualify for a credit on salaries and health care costs.