If you kept employees on your payroll during the COVID-19 pandemic, you may be eligible for the Employee Retention Credit (ERC). The team at Gilbert J. Munoz, CPA can help determine eligibility, navigate IRS regulations, and represent your company to the IRS if the need arises.
If you’ve already filed your taxes, don’t worry! We can also help you file an amendment if needed to retroactively clam this credit.
The basic idea of the ERC is that employers who retained employees during the pandemic can claim a tax credit for a portion of the employer share of Social Security tax.
Under current regulations, employers can, for the first quarter of 2021, claim a credit rate of 70% (up to $10,000) of W-2 wages per employee. In today’s economic climate that’s a tax credit that will make a big difference, especially for small businesses!
However, as with most things tax-related, there’s nothing basic about how the ERC works in practice. There are numerous eligibility tests and the regulations surrounding this tax credit continue to shift as the IRS makes adjustments.
At Gilbert J. Munoz, CPA, we are dedicated to staying up-to-date on all the changes to this credit so that we can advise you on the best course of action when it comes to making an ERC claim.
The ERC was part of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), but the Taxpayer Certainty and Disaster Tax Relief Act, enacted December 27, 2020, brought important updates to this tax credit.
In 2021, another big change came about with the Consolidated Appropriations Act. Under the CAA, more small-business owners across the country can qualify for the ERC thanks to three big changes:
- Businesses can now take advantage of the ERC and the Paycheck Protection Program loan, but not on the same wages.
- This new rule applies retroactively to 2020.
- The new law adds an enhanced ERC for 2021.
The American Rescue Plan Act of 2021 (ARPA) also brings major benefits for business owners pursuing the ERC. Under ARPA, the already enhanced 2021 ERC is extended for an additional six months.
While all this has been happening, however, courts are beginning to question and even dismantle some of the IRS regulatory and sub-regulatory guidance around the ERC due to confusion, lack of clarity, and lack of effective information sharing (which is required under the Administrative Procedures Act).
As you can see, the landscape of the ERC is ever-changing. At Gilbert J. Munoz, CPA, we make it our job to stay on top of these changes. We can help you navigate the ERC process to ensure that you’re in compliance with current—and shifting—laws, rules, and regulations.
Unlike predatory so-called tax firms, we will never promise you ERC credits without doing a thorough evaluation of your tax situation. This is particularly important in light of some sobering ERC–related news.
In November of 2021 at the virtual New England IRS Representation Conference, the IRS announced that it will be examining ERC claims with greater scrutiny in 2022. Steps taken include:
- Training the trainers
- Sending trainers out into communities
- Executing extensive ERC audits
- Selecting taxpayers to examine based on industry codes and other factors
In order to protect your business and ensure that you are in compliance with the evolving ERC rules, call the team at Gilbert J. Munoz, CPA today. We have extensive experience working with the IRS and we can represent you in the event of an IRS audit by filing a Peer of Attorney form 2848—which is included as part of our retainer when you contract us for ERC filing.
Having a reliable and informed firm like Gilbert J. Munoz, CPA to file the ERC and represent you during an audit is a critical step because the IRS has extended the audit period for ERC claims. Normally, the IRS has a 3-year audit period for tax returns, but they have extended to a 5-year audit period for ERC filings.
If you want to assess if your business is eligible for the ERC, or if you’re ready to file a claim, call Gilbert J. Munoz, CPA today. We look forward to being your trusted partner in navigating the ERC claims process.