Would my business qualify for the ERTC program?
Entrepreneurs and leaders who navigated business during a pandemic have unique perspectives. In spite of shut downs, mandates, distancing, and other restrictions, many leaders were able to pivot and make their business work.
As part of the CARES Act, the Employee Retention Tax Credit (ERTC) is designed to return some of the payroll tax dollars paid during the pandemic to business owners. This credit is available to businesses and organizations that retained employees while operating from March 2020 through December 2021.
This tax credit is not a loan or a grant from the federal government. It is a return of the payroll taxes from that time. According to Forbes, it is estimated that 70-80% of U.S. small businesses will qualify for this tax credit and should apply.
Be careful
Unfortunately, there are plenty of ERC mills that have popped up in recent months who may not fully understand the complex provisions of the law. It is extremely important to work with a professional organization who understands every detail of the ERTC ERC program and can apply the 2 tests accurately. Not every business or ministry will qualify. Your state, industry, and circumstances during the pandemic are determining factors.
Keeping up with the changes
There have been 13 changes to the ERTC since it began 3 years ago. And with over 1,300 pages of legal jargon and tax code, it’s not light reading. CS Business Consulting has been consulting with businesses and ministries to help them determine qualification for, accurately calculate, and then receive tax credits via the ERTC program since day 1. What’s more, we have a 100% success rate with the IRS.
If you were previously told that you didn’t qualify for this tax credit, that might not be the case anymore. There is more than one way to take advantage of the tax credit.
Test 1: Drop in revenue test. In 2020, businesses had to show a 50% decrease in revenue when compared to the same quarter of 2019. But in 2021, businesses need only show a 20% decline in revenue when compared to 2019.
Test 2: Partial suspension of services. Businesses that qualify under this test did not have to experience a complete shut down. The typical definition of shut down is defined much differently in the ERTC program documentation detailing exactly what does and does not constitute a shut down.
Businesses that experienced more than a nominal disruption to services due to mandates for social distancing, occupancy limits, supply chain issues, and more may qualify under test 2.
Don’t be afraid of the Boogie Man
You already filed your taxes for those years. The idea of filing an amendment of your payroll tax return (Form 941X- which is what is filed for ERTC) can be daunting. It doesn’t automatically mean that you will get the dreaded audit from the IRS.
The IRS can respond to an ERTC application with a review (which happens without the business knowing), an examination (like a mini audit where the IRS asks for proof for a single filing period), or an audit (yep…the big one we are all afraid of).
Currently, statistics show that you have less than a .1% chance of being audited even with an ERTC filing.
The IRS does have a look back period of 3 years from the date of filing the return. In the event that a file is examined, we maintain all documentation and details to support the filing. We call this the audit trail and provide the documents if needed at no charge to our clients.
The only sure way to find out if this tax credit is right for you is to apply. Start the process to get your refund by completing a short form.
Experts in the ERTC ERC program
At CS Business Consulting, we are experts in the 1,300 pages of law that govern the ERTC. Having helped businesses and churches get over $85 million back to date in tax credits, we’re ready to help you find out if you, too, should be receiving any of your payroll tax dollars back!
