Eligible businesses that have not applied for the Employee Retention Credit (ERC) still have time to take advantage of this pandemic stimulus program. ERC refunds are available for eligible employers to harvest.

But be careful! The IRS has warned employers to be wary of third parties advising them to claim the ERC when they may not qualify. Some of these service providers are also pressuring curious business owners to file quickly to meet looming deadlines. This false sense of urgency is simply not true.

Once ERC eligibility testing is performed and stimulus credits are calculated, taxpayers harvest the ERC refund checks by submitting Form 941-X within three years of the date the original Form 941 was filed, or two years from the date you paid the tax reported on Form 941; whichever is later.

For example, if you originally filed a third quarter 2020 Form 941 in October of 2020, you should have until October of 2023 to file an amended form 941-X. Or, if you originally filed a first quarter 2021 Form 941 in April of 2021, then you have until April of 2024 to file an amended Form 941-X.

ERC is a refundable tax credit designed to provide financial relief for businesses that continued to pay employees while fully or partially shut down due to COVID-19 pandemic restrictions or that had significant declines in gross receipts from March 13, 2020, to September 30, 2021.

Eligible employers can receive a 50% refundable tax credit on up to $10,000 in wages paid per employee (up to $5,000 per employee) for the period from March 12, 2020, to December 31, 2020. For 2021 the ERC program was increased to 70% of up to $10,000 in wages paid per employee per quarter if multiple 2021 quarters are eligible (potentially up to $21,000 per employee for 2021 in addition to the $5,000 potentially for full year 2020).

Companies who participated in the Paycheck Protection Program (PPP) are STILL eligible to apply for the ERC credit (as long as the wages utilized for PPP forgiveness do not overlap with the wages utilized for the ERC credit calculations). Managing the interplay between PPP-1 and or PPP-2 forgiveness and ERC claims is key to ensure eligible businesses maximize every stimulus dollar available.

For more information on eligibility and how to file for an ERC for your business, please contact Gray, Gray & Gray at (781) 407-0300.