The Rules
Rules, eligibility, and qualification criteria for 2020 and 2021 are very different and changed multiple times in different pieces of legislation.
We highly recommend you choose professionals who specialize in ERC like Karma Refunds.
What is ERC?
The ERC is a federal Covid relief program. Businesses can qualify for
UP to $26,000 per employee.
How does ERC work?
The program was enacted by Congress in the CARES Act of 2020 and ended in 2021. But retroactive claims can still be filed for up to 3 years.
The hottest business tax break is the Employee
Retention Credit. Businesses can claim up to
$26,000 per employee.
Who Qualifies
Businesses and organizations may be eligible for the program
if the following applies:
Had W2 Employees on Payroll
=/< 500 Full Time Employees eligible for 2021 ERC
=/< 100 Full Time Employees eligible for 2020 ERC
=/< 100 Full Time Employees eligible for 2020 ERC
AND
at least ONE of the following applies:
Experienced Quarterly Revenue Drops compared to pre-pandemic (exclude PPP funds)
Impacted by Covid Related Government Orders (Full or Partial Shutdowns, capacity limits, etc.)
Began Business Operations After February 15, 2020
Likely Qualified Businesses
As a federal program any business or organization that meets the eligibility criteria can qualify for substantial ERC refunds. But some qualify more often (these are trends and not a guarantee for any specific business)
PPP Loan Recipients
Experienced Major Revenue Disruptions
Restaurants, Bars/Taverns, Food Service, Hospitality
Day Care, Child Care, Senior Care
Personal Care Services (Hair & Nail Salons, Day Spas, Barbers)
Retail Businesses (Client/Customer Facing)
Medical, Hospital, Hospice & Nursing
Professional Practices & Financial Services
Manufacturers, Transportation & Trucking
Non-Profits, Religious & Service Organizations
Who Does Not Qualify
Not every type of business is eligible for the ERC Program, nor qualified for a refund. Including the following:
- Self-Employed, Solopreneurs, Consultants
- Businesses with only 1099 Employees
- Businesses with Over 500 Full Time Employees*
- Businesses that NEITHER had Revenue Losses NOR were impacted by Covid related government orders
* Some exceptions apply for smaller ERC amounts
ERC: Lucrative But Complicated
When large sums of money are at stake, and the IRS is involved, you want everything done right.
Many factors impact the total refund amount. Proper calculations require in-depth knowledge to ensure refunds are not under claimed or over claimed.
We believe ERC refund claims should be fully substantiated with proper documentation which takes time, research and expertise. Shortcuts are not worth the risk.
It’s probably one of the most powerful credits that I’ve seen in my 30 years with the Internal Revenue Service
Eric Hylton, former IRS commissioner for the Small
Business/Self-Employed Division
Think You Don’t Qualify? Think Again
Many businesses were told or believe they do not qualify for the ERC program. Here are some of the most common MYTHS why:
Thought they made too much money during the pandemic
Were told ineligible due to PPP loan
Thought Essential Businesses Could not participate
Believed they didn’t meet definitions to qualify
Received information true at the time, but updated rules made them eligible
Program ended in 2021 - Didn’t know they could still file retroactively
Their accountant took a quick look, not a full ERC Evaluation
Received inaccurate information from people they trust
Many of our clients were happily surprised they qualified for large refunds after they thought they did not. It costs NOTHING to receive a Full Evaluation with one of our ERC Advisors to find out if you qualify. But it could cost you a LOT to not find out.
Refund Factors
There are many factors that impact the final claim amount of your ERC Refund including:
Total W2 Employees
Hours Worked
Wages Paid
Qualifying Quarters
Government Order Dates
Health Insurance Expenses
PPP Loans
Other Programs
Schedule a complete and proper ERC assessment for your business today. Most ERC Evaluations only take 15 minutes. If you don’t qualify, we will not waste your time. Verify and confirm if you are eligible with our experts.
