In August 2021, the Treasury Department and the Internal Revenue Service published helpful guidance on how to calculate gross receipts for if one is determining an employer’s ability to qualify for the Employee Retention Tax Credit provided under the Coronavirus Aid, Relief, and Economic Security Act. The CARES Act, says an employer may qualify to receive ERTC if the business gross receipts for a corresponding quarter compared to 2020 decline by around 20%-50%. The updated process allows all employers, including those that are tax-exempt, to exclude certain stimulus proceeds, like PPP from gross receipts for determining ERC. This means that if you previously were excluded from seeking qualification, you may be eligible to file amended Form 941 for 2020.
On the negative side, all the changes and regulations make it a challenge to fully understand all of the hurdles of the application process. We all like to find ways to save a buck whenever possible, but this might not be the time to try to shave an expense by trying to study and understand IRS tax regulations. You have one chance to file for ERC qualification, so getting things wrong means the IRS will deny your tax claim. You can lose thousands of dollars in incentives for just one tiny mistake.
Whatever you do, use a professional, like Harringer Tax Service, that has successfully qualified clients and secured ERTC claims already. The CPA or tax preparer that you've trusted for years may be great for general tax matters but if they haven't qualified you for your ERC tax refund by now, they may not fully grasp how the process works. We are not seeking to replace your CPA or bookkeeper, we would instead gather information from them to secure the highest tax credit amount possible for your business.