Employee Retention Credit

The ERC is a COVID relief program designed to provide a refundable payroll tax credit that businesses can claim on qualified wages, including certain health insurance costs, paid to employees between March 13, 2020 and September 31, 2021

Negatively Impacted Businesses get up to

$26,000 per Employee

· $5,000 per employee for the calendar year 2020

· $7,000 per employee for the first, second and third quarter of 2021

· $26,000 in total per employee

This credit is designed to give Businesses a needed financial boost to recover from disruption and even suspension to their operations due to the COVID pandemic. There's absolutely NO cost or obligation to see if you are eligible. Considering the maximum credit amounts and applying that to the number of employees that have been employed since March of 2020, it’s well worth your time to see how much of a refundable refund your business could receive.

AM I AN ELIGIBLE BUSINESS?

Most employers, including colleges, universities, hospitals and 501(c) organizations following the enactment of the American Rescue Plan Act, can qualify for the credit. Previously, the Consolidated Appropriations Act expanded qualifications to include businesses who took a loan under the Paycheck Protection Program (PPP), including borrowers from the initial round of PPP who originally were ineligible to claim the tax credit.

· A trade or business that was fully or partially suspended or had to reduce business hours due to a government order during any eligible calendar quarter in 2020 and 2021, or

· Experience a significant decline in gross receipts during the calendar quarter in 2020 or 2021:

o In 2020, a significant decline in gross receipts is defined as a decline in gross receipts of more than 50% as compared to the same quarter of 2019.

o In 2021, a significant decline in gross receipts is defined as a decline in gross receipts of more than 20% as compared to the same quarter of 2019.

OTHER THINGS I NEED TO KNOW ABOUT THIS CREDIT?

· PPP LOANS AND FORGIVENESS – Wages used to calculate ERC credits must not also be used in determining PPP loan forgiveness.

· GOVERNMENT ORDERS – Employers who are not eligible due to “significant decline” in gross receipts must show that COVID related government orders had a more than nominal impact to their operation.

· ADVANCE PAYMENT – Employers have the ability to apply for an advance on current quarter 2021 credits.  This option is for employers who, in 2019, had an average of 500 or less full time employees.  If eligible, applying for an advance is absolutely the fastest way to receive your current quarter benefits as the funds are expedited and then reconciled on the corresponding payroll tax return.

· REFUND THROUGH AMENDING PAYROLL TAX RETURNS – IRS has allowed employers to retroactively amend their quarterly payroll tax returns to claim credits not previously identified.  The refund process can take up to 4-6 months, so amendments should be filed as soon as possible.

Our experience shows that where audit exposure exists, so do refund recoveries.  Client face constrained resources, conservative guidelines and the task of making tax decisions on thousands and thousands of transactions per year.  As a result, companies often overpay sales and use taxes and also fail to maximize available tax credits. ERS efficiently and seemlessly locates and supports refunds and additional tax credits with minimal client resources. 

Most states have a 3 to 4 year statute, so if you don't act proactively, every period more dollars are lost forever.  Let us show you our plan and list of satisfied clients.

In 2015, the State of California amended regulations related to nontaxable uses of diesel fuel and use fuel, as well as, exemptions for the use of fuel in motor vehicles. The amendments come into effect in September 2015; thus, significant refund opportunities exist for businesses and government entities. Our recovery specialists have thoroughly researched these regulations and the corresponding Revenue and Taxation Code sections, and with over 20 years of experience in managing tax refund claims, ERS is uniquely positioned to recognize your overpayments, optimize recovery, and identify cost saving strategies.

Filing a class action claim and receiving a refund, is a client’s legal right. However, the claims process is a complex, time consuming, document intensive project, which if done improperly, raises a myriad of issues, and ultimately results in a reduced refund or outright claim rejection. ERS’s experienced staff analyzes the Court’s plan of allocation to determine all filing requirements and required documentation, and ensures that clients’ claims are filed accurately and promptly with all required evidence. We manage all aspects of claim recovery throughout the administration process until recovery is fully paid; while requiring the utilization of minimal client resources.

View Current Cases

It is time to take advantage of a new sales tax exemption for purchases and leases of manufacturing and research and development equipment.  Pursuant to 2014 sales tax legislation to encourage business and economic growth, businesses may save $42,000 for every $1,000,000 spent on qualifying property – up to an annual savings of approximately $8.4 million (based on the maximum of $200 Million in qualified purchases per year).

Qualified Establishments may be included within a larger entity not included in the details below.  Let our professionals provide a full analysis of your operations!

In order to qualify for the exemption, businesses must, in general, meet all of the following conditions:

• Be engaged in business working in any type of manufacturing business or those in research and development in biotechnology, engineering, physical sciences or life sciences.
• Purchase or lease machinery, equipment, including component parts, that are used in any and all facets of the manufacturing process, including maintenance and repair, from receipt of the raw materials to the ultimate creation of the final product.
• Use the machinery and equipment in any and all stages of the manufacturing process from beginning to end.

Allow ERS’ experienced professionals, who have studied and analyzed the complexities of the recent legislation, to identify all qualifying exemptions and maximize your unclaimed refund.

Overview of Exemption

Manufacturing and Research & Development Equipment Allows a partial exemption of:

• 4.1875% July 1, 2014 – December 31, 2016
• 3.9375% January 1, 2017 – June 30, 2022

Qualifications to be eligible for this exemption, a buyer must meet all three of these conditions:

• Be a qualified person
• Purchase “qualified tangible personal property”
• Use that property for the uses allowed by this law

Qualified Person – Defined

• Engaged in manufacturing - NAICS codes 3111 to 3399
• Researchers and developers in biotechnologies - NAICS code 541711
• Engaged in research and development in physical, engineering, and life sciences - NAICS code 541712

Qualified Property – Defined

• Machinery and equipment (Purchased or Leased)
• Equipment and devices used to operate, control, regulate or maintain the machinery
• Property used in pollution control or Solar Power Equipment
• Material Handling Equipment Purchase
• Out of State Qualifying Purchases
• Special purpose buildings

Special Purpose Buildings

• Must be used for manufacturing, processing, refining, fabricating, or recycling processes, or it may be used as a research or storage facility for these processes
• For the entire building to qualify, no more than onethird of the usable volume of the building can be used for non-manufacturing or other non-qualifying uses
• A portion of the building may qualify Qualified Use - defined — Any stage of manufacturing, processing, fabricating, refining, or recycling process
• Research and development
• Maintain, repair, measure, or test any qualified property
• Materials or fixtures furnished and installed by a construction contractor Useful Life
• Property must have a useful life of one year or more
• Capitalized for state income or franchise tax purposes

Useful life

• Items that do not qualify:
• Items that are expensed in a single tax year
• Property placed in service and disposed of in the same year
• Items that are replaced on a regular basis of less than one year

Annual Purchase Limitation

• $200 million in qualified purchases per calendar year

Resources

• Regulation 1525.4
• BOE website
• Contact Jacob Bholat with specific tax questions - This e-mail address is being protected from spambots. You need JavaScript enabled to view it
• Exemption Certificates

Exemption Certificates

• BOE-230-M, Partial Exemption Certificate for Manufacturing, Research and Development Equipment
• BOE-230-MC, Construction Contracts - Partial Exemption for Manufacturing, Research and Development Equipment

Audits are costly in many ways; dollars paid for erroneous assessments, huge interest and penalties, time and resources allocated to the audit process and increased stress and wear on your staff.  As former auditors, our professionals uniquely understand the objectives, strategies and tactics used by government auditors.   With this knowledge, we can assist clients to effectively manage their audits through the following services:

• Audit Management
• Data Analysis
• Review of Information Request
• Direction of Audit Approach
• Strategic Planning
• Field Audit Negotiations
• Appeals/Protests
• Settlement Negotiations
• Board Representation

Audit assessments frequently result from unsupported credits, exemptions, and deductions.  ERS services assist clients with preparing supporting schedules and documentation for audit defense, claimed credits, exemptions and deductions.  These proactive services utilize our audit experience to complement your in-house controls and knowledgeable staff.

ERS services in this area include:

• Transactional Consulting
• Compliance Process Evaluation
• Audit Risk Analysis
• Nexus Studies
• Self-Assessed Use Tax Compliance
• Voluntary Disclosure
• E-Commerce
• Taxability Decision Tables
• Training

It's better to be prepared and make informed choices rather than face the unknown!

Transactional planning can be a key to reducing your overall tax burden.  Often, Clients may overlook accepted tax strategies that could produce significant tax savings simply because they failed to be proactive.  ERS's strategic tax planning services assist clients in legally minimizing or eliminating transaction-based taxes on a variety of business transactions including the following:

• Acquisitions of Aircraft, Vessels and Vehicles
• Software/Maintenance
• Insurance In-Lieu Exemption
• Business Reorganizations
• Sale/Acquisition of Business Assets
• Due diligence
• Printed Sales Messages
• Gifts and Point of Distribution
• Storage and Use Exclusions
• Exempt Medical Products
• Separation of Exempt Items from bundled purchases
• Warranty Contracts
• Transportation
• Facility Site Selection

 Call us for a free consultation!