Employee Retention Credit

ERC Success Stories

ERC CLAIMED BY CLIENT - $244,299.24

Private School

Background

A small independent private school located in Alexandria, Virginia that has been open for nearly two decades. Serve students in grades 6th through 12th and have 12 full-time educators and three adjunct instructors. Non-profit entity, under the 501(c)(3) designation, more than 40% of students receive financial aid.

Problem

When the pandemic hit this school experienced a restriction on operations. Schools and other businesses that were restricted in conducting their business operations are generally eligible for the ERC credit, which provides up to $26k per employee. In the situation of a school, the restriction would have been on the number of staff and students that are able to attend the school.

The restriction on operations resulted in a drop in revenue for the school in 2021. Parents were simply unable or unwilling to get their kids into this school and that had a major impact on the school.

Result

Received an employee retention credit of $244,299.24

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Our team of ERC specialists were happy to help this school. They are tax attorneys, CPAs, and other tax specialists who have what it takes to get the job done. We have helped other businesses with ERC credit options.
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Frequently Asked Questions

How can I appeal the disallowance of my ERC refund claim?
How can I expedite my ERC refund?
What is Letter 6612?

What is the ERC credit?

The ERC is a refundable tax credit for employers--introduced early in the COVID-19 pandemic to help employers keep their employees on payroll.

How do I claim employee retention credit for 2021?

The Employee Retention Credit is claimed on a business's quarterly IRS payroll tax returns, based on wages paid to its employee during periods of the pandemic that the business experienced a suspension in operations or a significant decline in revenue.

Can I still claim employee retention credit for 2020?

Yes! The Employee Retention Credit can be claimed on an amended quarterly payroll tax return up to three years from the due date of the original return.

How long does it take to receive employee retention credit refund?

Because of their ongoing pandemic-related backlog, the IRS is currently taking between 8-9 months to process Employment Retention Credit claims.

How do I apply for ERC credit?

How do I apply for ERC credit? There are three steps.
1) Determine the business's eligibility.
2) Calculate the Qualified Wages paid by the business.
3) Claim the ERC on the business's amended quarterly payroll tax returns.

For purposes of the Employee Retention Credit (ERC), are large and small employers treated differently?

Yes. Small eligible employers can include wages paid to all employees (even including part-time employees).  Large eligible employers can only include those wages paid to employees for not providing services.

How do I determine whether an employer is a large or small employer?

Per the CARES Act, whether a business is a large or small employer depends on whether “the average number of full-time employees employed during 2019 exceeded the applicable threshold amount.”

What’s a “full-time employee” in the context of the ERC?

It is an employee who, with respect to any 2019 calendar month, worked either and average of at least 30 hours per week or
130 hours per month.

Does the term “full-time employee” include “full-time equivalent employees”?

No. The IRS clarified that matter when it issued Notice 2021-49, stating:
‍

“For purposes of determining whether an eligible employer is a large eligible employer or a small eligible employer, eligible employers are not required to include full-time equivalents when determining the average number of full-time employees.”

What is the applicable threshold amount and how does it apply?

• The applicable threshold amount for the 2020 ERC is 100 or fewer full-time employees (as counted in 2019).
• The applicable threshold amount for the 2021 ERC is 500 or fewer full-time employees (as counted in 2019).
• For the 2020 ERC, a “small employer” is an employer that had an average of 100 or fewer full-time employees (as counted in 2019). Exceeding that amount results in large employer classification.
• For the 2021 ERC, a “small employer” is an employer that had an average of 500 or fewer full-time employees (as counted in 2019). Exceeding that amount results in large employer classification.

At the risk of sounding redundant . . . do I count part-time employees?

NO. Read QAs #2-#5 and count only as instructed therein.