What’s ERC And How Does Your Business Qualify?

What’s ERC and how does your business qualify?

“What exactly is the ERC?” I’ve heard that from many company executives across categories.

It’s understandable, agencies and consultancies have been advertising for ERC filing services for months and some of their claims seem too good to be true. Fortunately, the Employee Retention Credit is a legitimate program that was enacted by the IRS to help businesses that retained their employees through the pandemic.

There are many ways a business may qualify:

Did you need to change your ordinary business model to accommodate customer spacing and sanitation requirements?

Were you and your team unable to attend trade shows or conduct face to face sales meetings?

Did you suspend in-store demos or have to cap the amount of customers you allowed inside of your business?

Qualifying for ERC is extremely nuanced. Despite what many believe, It’s not just for those who lost revenue. Here are a few more factors that could qualify your company:

Switching to remote work.

Mandated shutdowns and limited hours.

Supply chain issues, and many more subtle business operation details.

If you answered yes to any of the above, your business may qualify for the ERC. Yes, even if your business was deemed “essential”. In order to substantiate your application with the IRS, CompleteRefunds.com thoroughly reviews and documents your business operations to validate and ensure that your business can qualify for the ERC credit while remaining 100% compliant.

There are lots of people offering ERC services, so how do you know who to work with?

You definitely don’t want to work with a team that is haphazardly checking boxes. The most important question is whether they understand your business’ landscape. Choosing to work with the wrong consultants for ERC can mean missing out on substantial amounts of funds. We’re looking at $12k-$15k in credits on average, per employee. That’s a big chunk of change. Especially in complex industries, details easily slip through the cracks leading to significantly lower credits and/or future compliance issues.

How does CompleteRefunds.com determine your ERC eligibility?

To assess your potential credit, we look at your 2020 and 2021 W2 payroll taxes for eligibility. If you’re in a state that imposed strict COVID-19 restrictions, it’s possible that your business qualifies for a higher refund. With the extremely complicated paperwork involved in this process, it’s no surprise that many businesses are advised by their financial advisors and legal teams that they do not qualify. Despite this, at the end of the day, it’s worth looking into the ERC.

With a bit of finesse and thorough analysis by industry experts, you could receive a hefty check in the mail, courtesy of the IRS. There’s no financial risk to filing, CompleteRefunds.com only gets paid when you do. Contact us anytime, we’re happy to answer any questions you have concerning your company and ERC, even if you’ve been previously told your business does not qualify.

Exemption No.	Exemption Short Title
1	Securities reporting issuer
2	Governmental authority
3	Bank
4	Credit union
5	Depository institution holding company
6	Money services business
7	Broker or dealer in securities
8	Securities exchange or clearing agency
9	Other Exchange Act registered entity
10	Investment company or investment adviser
11	Venture capital fund adviser
12	Insurance company

Exemption No.	Exemption Short Title
13	State-licensed insurance producer
14	Commodity Exchange Act registered entity
15	Accounting firm
16	Public utility
17	Financial market utility
18	Pooled investment vehicle
19	Tax-exempt entity
20	Entity assisting a tax-exempt entity
21	Large operating company
22	Subsidiary of certain exempt entities
23	Inactive entity

1. Number of employees at a large operating company

A large operating company must employ more than 20 full time employees in the United States. In general, a full-time employee is, with respect to a calendar month, an employee who is employed an average of at least 30 hours of service per week with an employer.

Employee headcounts are done at the level of each individual LLC, corporation, or other entity. FinCEN declined to permit companies to consolidate employee headcount across affiliated entities. Thus, for example, parent companies cannot count employees of their subsidiaries, or vice versa.

2. A large operating company’s presence within the United States

A large operating company must have an operating presence at a physical office within the United States.

The term “has an operating presence at a physical office within the United States” means that the company regularly conducts its business at a physical location in the United States that it owns or leases and that is physically distinct from the place of business of any other unaffiliated entity. (Although the final reporting rule itself is silent on the issue, it may be noted that FinCEN indicated in the Preamble to the final reporting rule that entities can qualify for this exemption if their physical presence in the United States consists exclusively of properties used as someone's residence.)

3. A large operating company’s gross receipts or sales

A large operating company must have filed a Federal income tax or information return in the United States for the previous year demonstrating more than $5 million in gross receipts or sales. This excludes gross receipts or sales from sources outside the United States.

For an entity that is part of an affiliated group of corporations within the meaning of 26 U.S.C. 1504 that filed a consolidated return, the applicable amount is the amount reported on the consolidated return for the group. (Note that while employee headcount cannot be consolidated among affiliates, gross receipts and sales can be consolidated.) The entity must have reported this greater-than-$5 million amount as gross receipts or sales (net of returns and allowances) on the entity’s IRS Form 1120, consolidated IRS Form 1120, IRS Form 1120-S, IRS Form 1065, or other applicable IRS form.