The ERC Program Summarized and Explained
Understanding the Employee Retention Credit Program
The Employee Retention Credit (ERC) is a refundable tax credit intended for businesses that:
- Continued paying employees while they were shut down due to the pandemic in 2020 and 2021,
- Suffered significant declines in gross receipts from March 13, 2020, to December 31, 2021.
Eligible employers can receive credits worth up to $26,000 per retained employee. The ERC can still be claimed on amended returns. The requirements are strict, though, and as a reminder, employers must have:
- Sustained a full or partial suspension of operations due to orders from a governmental authority that limited commerce, travel or group meetings due to COVID during 2020 or the first three quarters of 2021,
- Experienced a significant decline in gross receipts during 2020 or a decline in gross receipts in the first three quarters of 2021, or
- Qualified as a recovery startup business — which could claim the credit for up to $50,000 total per quarter, without showing suspended operations or reduced receipts — for the third or fourth quarters of 2021 (qualified recovery startups are those that began operating after February 15, 2020, and have annual gross receipts of less than or equal to $1 million for the three years preceding the quarter for which they are claiming the ERC).
There are some other restrictions and, unsurprisingly, nuances can be tricky to interpret and properly apply. Further, some employers can file claims for it through April 15, 2025.
Please consult your trusted advisor to understand more about this program.
Related ERC Articles
IRS Reopens Voluntary Disclosure Program for Errant ERC Claims
ERC Claim Correction Deadline Looming
Erroneous ERC Claims: New Voluntary Disclosure Program
IRS suspends processing of Employee Retention Credit claims
Understanding the Employee Retention Tax Credit (ERTC)
Beware of Uptick in Employee Retention Credit Scams
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Adam manages a variety of tax and accounting engagements for business clients in numerous industries, including manufacturing, real estate, construction, alternative investments, and professional services. He has experience in federal tax, multi-state corporate income and franchise tax, and municipal income tax. In addition to his tax compliance background, Adam specializes in preparing and managing complex partnership engagements.