The COVID-19 pandemic has had a devastating effect on businesses across the country, 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 a refundable tax credit that eligible employers, including PPP beneficiaries, can apply for to cover 70% of qualified wages paid. To maximize the benefits of the ERC and ensure compliance with all requirements, employers should understand who qualifies for the credit, as well as other aspects of ERC eligibility and applications. Additionally, maintaining appropriate documentation is key to meeting all compliance requirements.
To successfully meet these obligations, employers can outsource the entire process to take full advantage of the ERC and its benefits. Skilled nursing facilities have tended to avoid the employee retention credit due to 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 IRS ERC audit. Employers who qualify for the ERC are eligible for a refundable tax credit against their share of Social Security tax.
Although many employers who were eligible for the ERC did not apply for it initially, they still have time to file amended payroll tax returns and take advantage of the credit. The ERC is available to businesses or companies whose operations were subject to a total or partial suspension due to a government order, or that experienced a significant decrease in gross revenues during the pandemic. Originally, employers had to choose between applying for a Check Protection Program (PPP) loan or applying for the ERC. However, an eligible employer cannot apply for the ERC on any qualifying salary that it has used to obtain forgiveness of a PPP loan (i.e., double-dipping).
The federal government established the Employee Retention Credit (ERC) to provide a refundable tax credit to help businesses cover the cost of keeping staff employed. With up-to-date technological solutions in combination with tax credit specialists who help employers identify if companies are eligible, request the full amount of the credit and ensure proper payroll tracking and documentation, businesses can take full advantage of this program and its benefits. Watch this webinar for tips to improve onboarding while getting more tax credits. Contact an Experian tax expert directly with an Experian Employer to learn more about ERC eligibility and get all the support you need to determine your company's eligibility, perform detailed calculations and manage archiving logistics.