The Employee Retention Tax Credit (ERTC), originally passed in the CARES Act of March 2020, encourages businesses and tax-exempt organizations to keep employees on payroll during the pandemic. The credit was designed for both essential and non-essential operations. We previously wrote about the qualifications and benefits of the tax credit here: Employee Retention Tax Credit Provides Additional Relief for Businesses.
Your business is eligible per quarter by meeting one of the following tests:
- Experienced significant decline in gross receipts during a calendar quarter compared to the same quarter in 2019, or
- Operations fully or partially suspended due to government orders or restrictions related to COVID-19
Your business may not have experienced a significant decline in gross receipts to qualify under the first test, but you may qualify under the second if you were impacted directly or indirectly by government orders or restrictions. This can apply even if you are considered an essential business. There are two key questions that can help you determine whether you qualify:
- Could your business continue in a comparable manner?
- Was there a more than nominal impact on the business?
Additional qualifying factors to consider include:
- Interrupted or disrupted operations
- Supply chain interruptions
- Inability to access equipment
- Limited capacity to operate
- Inability to work with your vendors
- Reduction in services or goods offered to your customers
- Reduction in your hours of operation
- Shifting hours to increase sanitation of your facility
MichaelSilver is here to help you take a second look at your eligibility for this credit. Claiming the credit can be a complicated process. There are many government orders and restrictions to consider if your business did not meet the decline in gross receipts test. For some cases, we are partnering with Alliantgroup to help navigate these qualification nuances. Alliantgroup is staffed with over 70+ attorneys and provides specialty tax services related to income tax credits and incentives for businesses.
For more information, please contact your MichaelSilver tax advisor today at 847.982.0333.