The Employee Retention Credit (ERC) is a complex tax credit that can help businesses and tax-exempt organizations offset the cost of employee wages during the COVID-19 pandemic.
However, the ERC has also become a target for fraudulent claims, and the IRS has issued a new Q&A publication to help businesses understand the eligibility requirements.
Key points from the IRS ERC Eligibility Checklist:
- To be eligible for the ERC, businesses must have paid wages to employees between March 13, 2020, and December 31, 2021.
- Businesses must have also experienced a significant decline in gross receipts during specified eligibility periods in 2020 or the first three quarters of 2021.
- Businesses fully or partially suspended by a government order due to the COVID-19 pandemic in 2020 or the first three quarters of 2021 may also be eligible for the ERC.
Common questions and concerns:
- Supply chain issues: The IRS has clarified that supply chain disruptions alone do not qualify businesses for the ERC.
- Improperly claimed ERC: If you have improperly claimed the ERC, you may have the option to withdraw your amended return or repay the credit to the IRS.
If you need assistance understanding the ERC eligibility requirements or filing a claim, you should work with a trusted tax professional such as Pennywise Tax Strategies.
The IRS ERC Eligibility Checklist is a valuable resource for businesses that are considering claiming the ERC. By understanding the eligibility requirements and common questions, businesses can avoid potential pitfalls and maximize their chances of receiving this valuable tax credit.
If you need help working through the ERC, please contact us today. We have extensive experience helping businesses navigate the ERC process and avoid costly mistakes.