• The Employee Retention Credit (ERC) provides a refundable tax credit of up to $5,000 for each employee your business retained between March 13 and December 31, 2020, and up to $21,000 for each retained employee between January 1 and December 31, 2021.
• You qualify as an eligible employer if, (1) your business was ordered to fully or partially shut down, or (2) your gross receipts fell below 50% compared to the the same quarter in 2019 (for 2020) and below 80% compared to the same quarter in 2019 (for 2021).
• You can claim your credit by reducing quarterly payroll tax deposits sent to the IRS.
• Any credit that exceeds payroll tax deposits is eligible for a direct refund from the IRS.
• Employers who received Paycheck Protection Program (PPP) loans can claim the ERC for qualified wages not treated as payroll costs in obtaining forgiveness of the PPP loan.

Call us today at (310) 424-9686

Get a free consultation to see if your business qualifies.

Find out how much your tax credits could be.

What is the Employee Retention Credit (ERC)?

The Employee Retention Credit was enacted as part of the CARES Act in March 2020 to incentivize businesses impacted by COVID-19 to keep its employees on the payroll by providing a refundable payroll tax credit for qualified wages paid to retain employees between March 13 to December 31, 2020.

The Taxpayer Certainty and Disaster Tax Relief Act enacted in December 2020 under the Consolidated Appropriations Act (CAA) modified and extended the ERC for six months through June 30, 2021.

The recent American Rescue Plan enacted in March 2021 further extends the ERC through the end of 2021.

How much of a tax credit can my business get?

The most recent update to the Employee Retention Credit provides a refundable credit up to $5,000 for each employee retained between March 13, 2020, and December 31, 2020, and up to $21,000 for each employee retained between January 1, 2021, and December 31, 2021 (up to $7,000 per quarter).

Thus, if you are an employer with 10 employees, you could be eligible to receive up to $260,000 under the ERC. For 100 employees, it could be up to $2.6 million.

The number of  employees you averaged in 2019 determines which employees you can claim for the credit, depending on the year:

• For 2020
  If you employed 100 or fewer employees on average in 2019, you can claim the credit on wages for all employees, regardless of whether or not they are working. If you averaged more than 100 employees in 2019, you can only claim the credit on wages for employees who are not working.




• For 2021
  If you employed 500 or fewer employees on average in 2019, you can claim the credit on wages for all employees, regardless of whether or not they are working. If you averaged more than 500 employees in 2019, you can only claim the credit on wages for employees who are not working.

Does my business qualify?

There are several qualification standards to consider but two of the primary conditions to determine an employer’s eligibility include the following:

(1) business operations were partially or fully suspended by a governmental authority due to COVID-19

(2) the business experienced more than a 50% reduction in gross receipts in a calendar quarter in 2020 compared with 2019, or more than a 20% reduction in a calendar quarter in 2021 compared with 2019

If you were not in business in 2019, you can use the corresponding quarters from 2020.

How does the IRS issue the ERC?

You can claim the tax credit by deducting any withholding amount including federal income taxes, employee and employer FICA taxes on your Form 941, Employer’s Quarterly Federal Tax Return up to the credit amount. Any excess credit will be refunded or advanced by the IRS.

My business received a Paycheck Protection Program (PPP) Loan. Does this disqualify my business from the ERC?

Even if your business received a PPP loan, you may still qualify for any wages not treated as payroll costs from the forgiven portion of your PPP loan.

Although the CARES Act precluded PPP borrowers from ERC eligibility, this was amended in December 2020 through CAA to make the ERC much more available to PPP recipients.

Will my CPA or accountant be able to advise me on the ERC and maximize the tax credit if my business is eligible?

The ERC is a new tax provision and many CPAs and accountants do not have the expertise to confidently navigate their clients through its requirements.  Depending on your business, it could be too complicated for many financial advisors to undertake.  This is unfortunate since millions of businesses across many industries are eligible for the ERC.

As a taxation firm, Culver Services, Inc. specializes in complex tax matters and can guide your business through the eligibility requirements of the ERC and handle the necessary paperwork. We’ll take the time to explain the process and keep you informed every step of the way.

Please do not miss this rare opportunity to claim the maximum tax credits available to your business due to COVID-19.

Call us today at (310) 424-9686

Get a free consultation to see if your business qualifies.

Find out how much your tax credits could be.