The eligibility criteria for the Employee Retention Credit (ERC) may vary based on specific circumstances and legislative changes. here are the general eligibility requirements for the ERC in the United States.
1. Business operations: To qualify for the ERC, you must be an eligible employer who carries on a trade or business during the calendar year in which the wages are paid or incurred. This includes for-profit businesses, tax-exempt organizations, and certain governmental entities.
2. Partial or full suspension of operations: The ERC is available to employers who experience either a full or partial suspension of their operations due to government orders related to COVID-19. A full suspension means that the business is completely shut down, while a partial suspension means that the business operations are significantly limited.
3. Significant decline in gross receipts: Alternatively, even if there is no suspension of operations, an employer may still qualify for the ERC if they experience a significant decline in gross receipts. Initially, the CARES Act required a decline of at least 50% in gross receipts compared to the same quarter in the prior year. However, the eligibility criteria for gross receipts may have changed in subsequent legislation, so it is essential to refer to the most recent guidelines.
4. Employee count: The ERC eligibility may also depend on the average number of full-time employees employed during 2019 & 2020. For businesses with more than 100 employees, only wages paid to employees who are not providing services due to COVID-19-related reasons can be considered for the credit. However, for businesses with 100 or fewer employees, all wages paid during the eligible period can be considered, regardless of whether the employees are working or not.
It’s important to note that these eligibility criteria are based on the information available up until September 2021. The ERC provisions have undergone updates and changes since then, so it’s crucial to consult the most recent guidance from the IRS or a qualified ERC tax professional to determine the current eligibility requirements.
ERC Tax Financial provide ERC tax credit services for small businesses throughout the United States. Contact us to see if you qualify for the ERC tax credit grant.