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Employee Retention Credit (ERC) – Overview & FAQs

The Employee Retention Credit (ERC) is a refundable payroll tax credit designed to support businesses that kept their employees on payroll during the COVID-19 pandemic despite government-mandated restrictions or financial challenges. From 2020-2021, Congress passed four different acts that impact ERC policy and eligibility, modifying terms regarding which employees are eligible, how to determine qualified wages, and more. We’re here to provide you with the most up-to-date information and resources to help your business benefit from the program. 

Employee Retention Credit (ERC) – Overview & FAQs

Is It Still Possible to File a Claim?

Yes. The Employee Retention Credit Program officially ended in late 2021, but many businesses remain eligible to retroactively claim the credit. Our related article outlines the specific terms and deadlines for retroactive claims on quarterly 2020 and 2021 tax submissions, as well as tips for determining qualification. Most employers still qualify for retroactive claims of up to $26,000 per employee as long as they filed their Form 941s on time throughout 2020-2021.

Still have questions specific to your organization? Visit our related article to learn more about eligibility time frames, part-time vs. full-time employee qualification, PPP considerations, and more.

How Do I Know if I Qualify?

The good news is that the majority of employers qualify for ERC. This includes universities, colleges, 501(c) organizations, and hospitals. Be aware that an employee retention credit applies only to the portion of each quarter when a business was suspended, not the entire quarter. 

Qualifying organizations can qualify for one of the following reasons:

  • Partial or full suspension of operations during the COVID-19 pandemic due to governmental orders affecting travel, commerce, or group meetings.
  • A significant decline in gross receipts during the COVID-19 pandemic.
  • Designation as a Recovery Startup Business (those who started a business after February 15, 2020 and who meet other gross receipt conditions). These businesses could be eligible for up to $50,000 per quarter in the third and fourth quarters of 2021.

More likely than not, your organization is eligible to receive employee retention tax credit. Explore the 7 Common Myths that cause businesses to bypass ERC claims that could otherwise benefit their company. 

What is the Application Process?

If your organization submitted Form 941s in 2020 and/or 2021, you can receive ERC by submitting amended Federal Quarterly Employment Tax Return, Form 941-X, for any applicable quarters. These must be completed on paper and mailed to the IRS. If your claim is approved, you will receive your ERC in the form of a paper check from the IRS.

Our related guide on ERC Data and Industry Trends can provide you with the latest information on IRS processing timelines and steps your organization can take to avoid a flagged claim or audit.

How CAVU HCM Can Help

We’ve already helped our clients secure over $50M+ in Employee Retention Credit funds by offering a streamlined and results-focused approach. We understand from experience that your business’ situation demands a thorough review and analysis to help you maximize your ERC. 

Our goal is to make the ERC process as simple, stress-free, and beneficial for your business as possible. Once you’ve scheduled a call with us, we can provide the following services:

  • Perform a No Obligation Review to determine whether your organization is eligible for ERC
  • Identify in which time periods your organization is eligible for ERC to help you qualify for the maximum allowable amount
  • Perform a Detailed ERC Analysis to organize your payroll data and assign wages by employee (properly navigating PPP considerations and avoiding double-dipping of COVID sick pay credits)
  • Complete and file all necessary paperwork with the IRS for each eligible quarter
  • Send completed paperwork via certified mail and track/report the status of your refund processing

As a central part of our process, we only collect a fee from our clients after they’ve received their ERC checks from the IRS. And, if you don’t get paid, neither do we. In general, the IRS is processing (and disseminating checks for) ERC claims within 5-9 months after each submitted Form 941-X. This turnaround rate is expected to improve as the official program has ended and the IRS is only accepting retroactive claims.

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Maximize Your ERC Claim with CAVU HCM

We are here to help you make sense of ERC. Our dedicated experts will guide you through each step of the process to determine eligibility, organize your payroll data, and submit a claim that maximizes your benefits and lets you avoid any issues with the IRS. Contact us to start our collaboration or get a quote today.