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What is the Employee Retention Credit?

Congress recently authorized $1.9 trillion in stimulus in 2021 to aid businesses and consumers. This includes a powerful payroll tax credit called the Employee Retention Credit (ERC) that can potentially eliminate your business’ payroll tax or generate a cash refund. For most businesses this is one of the largest federal incentives available, providing thousands of dollars per employee. Most importantly, essential and non-essential businesses can claim this credit even if they took part in the Paycheck Protection Program (PPP) or other COVID relief.

Deadlines are quickly approaching, so we are encouraging employers to apply before May 17th.

Below you will find additional information to understand more about the credit, who can benefit, and how to get started.

Changes to the Employee Retention Credit

Recent legislative changes enhanced the Employee Retention Credit. Previously under the CARES Act, businesses that claimed the Paycheck Protection Program (PPP) could not also claim this credit. Now, the Employee Retention Credit can be claimed alongside PPP and other payroll-based incentives.

 

Do I qualify for the Employee Retention Credit?

There are two main ways a business can qualify; if there has been a drop in revenue or if there has been a business disruption. Our experts will work with you to understand your specific circumstances and ensure IRS compliance, but here is a simple guide to understanding if you are eligible for the credit. If ANY of the following apply to your business, then you should take the next step to estimate your credit. Keep in mind even essential businesses are likely to be eligible.

Below are just a few examples of COVID-19 impacts that can make your business eligible for the credit:

  • Revenue decreases from 2019 to 2020 due to the pandemic
  • Full or partial government-ordered shutdown
  • Disruptions to your business’ supply chain or vendors
  • Inability to access your equipment
  • Limited capacity (e.g. only 25% capacity)
  • Reduction in services offered (e.g. take out only)
  • Reduced working hours for cleaning
  • Departments or divisions of your company suspended

Why work with us?

We have over 1,000 experts to assist you with maximizing your credit while minimizing your risk. With former IRS commissioners and key former lawmakers on staff who are intimately familiar with this recent legislation as well as the intricacies of the U.S. Tax Code.

How much is the credit worth?

Advance Your Credit

ADDITIONAL INCENTIVES

Work Opportunity Tax Credit (WOTC)

This WOTC program was developed to motivate employers to hire individuals from vulnerable demographic groups in efforts to break down the barriers they usually face to secure employment. Groups consist of veterans, summer youth employees, food stamp recipients, ex-felons and others. As part of the updated stimulus bill, the Work Opportunity Tax Credit was extended through 2025 alongside the PATH Act.

Eligible employers can earn up to one billion dollars under this credit. This credit allows employers to extend work opportunities to more U.S. citizens and invest in their growth to deliver long-term value to the business and its workforce. This program further promotes diversity in the workplace and provides beneficiaries the means to become independent, productive taxpayers.

Section 41 (R&D Tax Credit)

The Research and Development Tax Credit was introduced to promote a culture of innovation and commitment to create more technical jobs in the U.S. Businesses in America are being rewarded for paying employees for:

  • Developing or designing new products or processes
  • Enhancing existing products or processes
  • Developing or improving existing prototypes or software
  • Developing or designing custom products for clients

Section 41 could potentially be the most valuable source of relief available to your business. On average the credit is worth 5X the average Paycheck Protection Program loan. Over 50 industries qualify, from software and tech to agriculture and just about everything in between. With the funds you can get back by conducting an R&D study with our firm, you will significantly decrease your company’s tax liability and find yourself with ample funds that can be invested back into your business. We will help your company review and document all qualifying activities to help you maximize your benefit.

Go Green with Section 179D

Section 179D—the energy-efficient commercial buildings deduction—was originally passed by Congress as part of the Energy Policy Act of 2005. This allows businesses to receive a tax deduction up to $1.80 per square foot when improving building envelope, lighting, heating, cooling, ventilation and hot water systems of commercial buildings.

With the most recent round of provisions, Section 179D was made permanent. So, building owners, lessees, architects, engineers, contractors, and building designers alike can benefit from this credit for time to come by installing lighting, HVAC or building envelope systems that are energy efficient.

Not only can building owners take advantage of 179D, but the building designers and contractors that work on government buildings to increase energy efficiency can also claim the deduction. Government contractors that improve or build government buildings like schools, libraries, prisons or offices can claim this credit.  

Additional environmentally focused credits that were extended or made permanent consist of carbon oxide sequestration, solar energy, electricity produced by renewable resources, and others.

The Million Dollar Question (Literally)

How do I claim these credits, and when?

The stimulus bill rewards employers who have continued to do business and retain employees on American soil by providing them with significant relief funds. Companies who do not take advantage of the Employee Retention Credit and other incentives before May 17th will miss out on the opportunity to claim six to seven figures in funds.

DON’T MISS OUT ON FREE MONEY

On December 21, 2020 the Consolidated Appropriations Act of 2021 was passed, implementing provisions that will provide organizations in any and every industry more opportunities to receive federal funds so they can keep employees on payroll.

Despite continued uncertainty caused by COVID-19, 2021 is already on the up and up for SMBs, 501(c)s and certain public instrumentalities based in the United States. The above provisions allow businesses to claim significantly more in relief benefits through increased flexibility in combining programs and incentives.

We specialize in payroll-based tax incentives. With the help of our tax experts, you can get a jump on the Employee Retention Credit and potentially qualify for other incentives that we specialize in..

Once you join our network, we will continually keep you up to date on the incentives that you can qualify for as more beneficial provisions come into play for years to come.