The COVID-19 pandemic has had a devastating financial impact on many companies, and while no government program can fully compensate for the losses incurred, the Employee Retention Credit (ERC) can provide significant relief. Established under the Coronavirus Aid, Relief and Economic Security Act (CARES), the ERC is an incentive for companies that meet certain requirements to keep their employees on the payroll and maintain their business during the pandemic. With changes in programs and incentives, it can be difficult to understand ERC qualifications. To help employers maximize their benefits, Experian has put together a guide to understanding ERC eligibility and applications. For both large and small employers, “salaries” are defined as taxable salaries that include certain contributions to health benefit plans.
To minimize risk during the claim process, employers must understand who qualifies for the ERC, as well as other aspects of ERC eligibility and applications. It is also important to maintain appropriate documentation in order to meet all compliance requirements. To successfully meet the obligations surrounding the ERC, employers can outsource the entire process and take full advantage of ERC benefits by relying on up-to-date technological solutions in combination with tax credit specialists. Skilled nursing facilities have tended to avoid the Employee Retention Credit because of its complexity, even though they are likely to meet the eligibility requirements. Before filing a claim with the ERC, employers must fully understand their background and best practices in order to prepare for a possible ERC audit of the IRS.
Validated by Experian Data Quality. Although a large number of employers who were otherwise eligible for the ERC did not apply for the credit, they still have time to file amended payroll tax returns and take advantage of the ERC. If they delayed payroll taxes before receiving the ERC in the fourth quarter, they had to determine any underpaid tax amounts and prepare to resolve those issues. The purpose of the ERC was to encourage employers to keep employees on the payroll even if they weren't working during the period covered due to the effects of the coronavirus outbreak. Eligible employers can still apply for the ERC for previous quarters by filing the appropriate adjusted employment tax return within the time period set out in the instructions on the corresponding form. The federal government established the Employee Retention Credit (ERC) to provide a refundable employment tax credit to help businesses cover the cost of keeping staff employed. The ERC was a tax credit in which business owners received a refundable tax credit for keeping employees on the payroll during the COVID-19 pandemic.
To do this, it is necessary to understand how this program works, who qualifies for the ERC and how to apply for it. To maximize benefits from this program, employers should contact an Experian tax expert directly with an Experian Employer to learn more about ERC eligibility. Additionally, employers should watch this webinar for tips on improving onboarding while getting more tax credits. Finally, it is important for employers to understand their background and best practices in order to prepare for a possible ERC audit of the IRS.