Remember the break of the pandemic? Surely yes! The horror was real, and the time was dreadful. Companies worldwide were forced to stop to keep the people safe. The lockdown made people hopeless as they didn’t know how their wages would get affected. The companies without functioning would face a hard time paying their employees. At this time, Congress passed programs that provided financial assistance to the companies so that they could pay their employees, and this program is called ERC. The ERC assisted the employers with tax credits to pay the employees’ wages and health care insurance. The ERC stopped functioning in November 2021 after the Infrastructure Investment and Jobs Act was passed.
Details about ERC
ERC entered the function on 13th March 2020 and seized it on 31st December 2020. The ERC is a refundable payroll tax part of the CARES Act. The main role of the ERC was to encourage the companies to keep paying their employees during the pandemic. The companies who enrolled in Paycheck Protection Program loans were able to make claims of up to 50% of qualified wages. Consolidated Appropriation Act expanded ERC. Further, the employers who qualified for 2021 were able to make claims of 70% qualified wages.
The eligibility for ERC
To be eligible for ERC, a company has to have run a business that ceased operating completely in 2020 because of Covid-19. And providing evidence that your sales have declined more than 50% compared to the gross sale in 2019.
To qualify for the program in 2021, you must provide evidence that the gross receipts have declined by more than 80% compared to 2019. If your business is new and came into operation in 2020, compare the gross receipt with 2020.
The CARES Act is of no use to self-employed people to claim ERC; neither can you claim wages for the individuals working for you.
If you are facing problems getting ERC, get help from tax professionals. The professionals will help you to keep going on the right track. They will stop you from going in any wrong direction. The professionals are well trained and experienced in handling matters of a similar sort. Suppose you are denied ERC; you will be guided by the tax professionals on how to reapply. Keep track of all the documents and tax papers to make the process easier.