Employer Retention Credit Expanded Part 3
There are four commonly held misbeliefs about this credit that should be clarified.
1 – Essential Businesses Are Not Excluded
In order to qualify for the credit, your business needs to have been interrupted or been hindered given your inability to travel or hold group meetings. This has nothing to do with the requirement that your gross receipts be down.
Your income for the period could be up 50% and you would still qualify as long as your business was hindered by the pandemic. These are mutually exclusive events. It’s one or the other, not both.
2 – The Shutdown Requirement
To qualify, you do not have to be shut down and have your receipts off by a particular amount. This is another mutually exclusive event. If you were shut down by government order and your receipts are up, you will again qualify.
3 – Greater Than 50% Owners Qualify
No matter what the type of entity, if you are a greater than 50% owner, you can not claim the credit on your own wages. The aggregation rules apply here as well. If you, your spouse, and a third party owner equal portions of your business, then neither you nor your wife can claim the credit. Technically under tax law you are one person who owns 66.6% of your business. As such, you cannot claim the credit.
This rule has been broken more times than not. It was under question until recently when the IRS sent out a clarification. Many have been able to violate the rule because it’s difficult for the people processing the returns to check who the owners of the entities are when processing the refunds.
In this instance, if you are the only employee of your company, then you cannot apply. If you have five employees, then only the other four would qualify.
4 – The ERC Needs To Be Filed Timely
This is no longer true. Prior to the new legislation being signed into law, the ERC needed to be filed timely. We now have the ability to file an amended 941X along with the 7200 on all of the quarters going back to the 2nd Quarter of 2020.
Let me leave you with this.
It’s finally ready. Our program of consulting and completion of the Employee Retention Credit is officially in place.
Our program of full consultation includes:
1 – Qualifying your entity for the credit
2 – Making sure which employees and wages are qualified
3 – Estimating the potential credits to be received
4 – Consultation to see which quarters, going back to the beginning of the pandemic, can be used for the credit.
5 – Excluding any wages that are necessary for 1st or 2nd Draw PPP Loan forgiveness
6 – Preparation of all necessary work papers and worksheets
7 – Preparation of the returns
8 – Monitoring the results
9 – One full set of amendments per quarter, if necessary
You may sign up for this program by going to the following web address.
We look forward to helping you.
We’re all going to get through this. Let’s get through it together.
Accounting Solutions Ltd. stands ready to complete our mission and purpose of protecting you, your family, and your business. If there is anything you need, whether you are a current client or not, you have but to ask. I’m here and I remain,
Accounting Solutions Ltd.
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