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Frequently Asked Questions

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  • I want to learn more about the ERC, where can I read the guidance?
    For the most up to date IRS guidance, click here. The IRS posted guidance on numerous occasions. Most notably, you should read Notice 2021-20, Notice 2021-23, Notice 2021-49, Notice 2021-65, and Rev Proc 2021-33.​​ These notices can be found here.
  • How long will it take to receive my credit?
    Historically it’s taken anywhere from 6-8 months, however, the IRS has recently put a pause on processing new ERC claims until at least December 31, 2023. However, as of March 1st, 2024 this pause is still in effect. The IRS will continue processing previously filed claims, and has increased the minimum 90 day processing time to 180 days to enhance further compliance review. They have been quoted that they are processing around 1,000 per week, compared to 40,000 per week prior to the pause. ​ There is a phone number you can call to obtain a status update: 800-829-4933 Option 1, Option 3.
  • How will I receive my credit?
    You will receive a check mailed to the address that the IRS has on file for your business. You will receive one check per quarter that you have claimed the credit for. Be sure to check your mail consistently. ​ Do not complete a mail forwarding at the USPS as they do not forward treasury checks. You must complete any address changes through the IRS and we would recommend not changing any addresses until you receive all of your credits.
  • What are the tax consequences and filing requirements?
    Once you receive the credit, you should let your tax preparer know that you received your credit. They will need to reduce your wage expense by the amount of the credit received, for the year that the credit was for. In addition, part of the check will include interest, interest should be claimed in the year the check was received. Exact details can be found in Notice 2021-49. Once the 941x is filed you should let your tax preparer know what to expect, depending on the size of the refund check, you can amend your taxes ahead of time. However, if there is a large tax bill due to the credit amount, you may decide to wait until you receive the funds.
  • What do I have to do with the credit once I receive it?
    There are no specific requirements, you are free to do as you wish with the credit. You can use it for working capital, payroll, or ongoing expenses.
  • How long is the statute of limitations?
    Under current law, the statute of limitations does not reset in the case for an amended return. Therefore, the IRS reserves the right to audit an ERC claim with the following deadlines: 2020: April 15, 2024 2021 Q1 Q2: April 15, 2025 2021 Q3: April 15, 2027 Notwithstanding any other statute of limitations, the government has two years from when it pays an employee retention credit refund to bring suit to recover the refund if it later determines the taxpayer was ineligible.
  • I need to change my address, what should I do?
    To ensure you receive your mail from the IRS and the Treasury Department, you need to file the appropriate forms with the IRS. Form 8822-B needs to completed and mailed to the IRS. If you file a mail forwarding with the USPS, you will not receive your checks.
  • When is the deadline to file for ERC?
    As of January 19th 2024: The deadline for 2020 claims is 4/15/2024 The deadline for 2021 claims is 4/15/2025 There is pending legislation that would move the deadlines for all ERC claims to Jan 31, 2024. HR 7024.
  • Are wages paid to owners and their family members eligible?
    It depends on the ownership structure. If you are a majority shareholder (51% or greater) your wages and any family member wages generally do not qualify. In the rare instance that you have no other family members alive anywhere in the world, guidance states that your wages would then qualify. If you are a minority shareholder (less than 50%) your wages and any family member wages would qualify.
  • How do I determine if my entities are considered aggregated for purposes of the ERC?
    The IRS stated that all businesses that are considered an aggregate group must be combined when determining if the entities qualify for the ERC. Generally speaking, if you own multiple businesses you should create a flow chart to analyze all entities in which common ownership exists to determine the appropriate aggregation steps to take. This is important in determining whether you are a small or large employer as well as determining if a member of the aggregate group is considered an eligible employer. Guidance states that if one member of the aggregate group is an eligible employer, then all members of the aggregate group would be deemed an eligible employer.
  • What is the max PPP forgiveness that I can allocate for owners and non-owners?
    The max payroll costs you can allocate for owners is $20,833 each and $46,154 for non-owners. Related parties to owners are also limited to $20,833.
  • How does the Restaurant Revitalization Fund work with ERC and PPP?
    Guidance allows for double dipping of ERC and RRF wages during Q1 and Q2 of 2021. However ERC and RRF cannot be double dipped during Q3 2021. As always, ERC and PPP cannot be claimed on the same wage.
  • How are you calculating the max ERC to be $33,000 per employee?
    The max you can receive for ERC per employee 2020 Credit would be $5,000 (50% on a cap of $10,000 in wages) Q1 2021 Credit would be $7,000 (70% on a cap of $10,000 in wages) Q2 2021 Credit would be $7,000 (70% on a cap of $10,000 in wages) Q3 2021 Credit would be $7,000 (70% on a cap of $10,000 in wages) Q4 2021 Credit would be $7,000 (70% on a cap of $10,000 in wages) You would only qualify for Q4 2021 if your business is a recovery start up business, which means you began carrying on any trade or business after February 15, 2020 and your average gross receipts are less than $1,000,000. In which case, the max credit you could receive for Q4 2021 would be $50,000.
  • Are part-time employees eligible for ERC?
    Notice 2021-49 makes clear that any employee, regardless of how many hours they work, are eligible for the ERC. For purposes of identifying qualified wages, an employee’s status as a full-time employee is irrelevant and wages paid to an employee who is not full-time may be treated as qualified wages if all other requirements to treat the amounts as qualified wages are satisfied.
  • Are payments made to independent contractors eligible?
    No, only W2 wages paid to employees qualify for the ERC.
  • Are other types of insurance premiums eligible for ERC qualified wages or is it only health insurance?
    The employer portion that is paid for employees health insurance is the only insurance that is eligible for ERC. Any other type insurance is not eligible (workers comp, life, liability, etc).
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