ERS provides a comprehensive review of vendor payments for the clients in the insurance industry. This opportunity is specific to California, as State Law, provides a gross premiums tax that is paid by Insurance Companies in-lieu of all other taxes. This provision provides insurance companies in California with an exemption from “use” tax but not “sales” tax.
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.
Negatively Impacted Businesses get up to
1
Per Employee
$5,000
per employee for the calendar year 2020
$7,000
per employee for the first, second and third quarter of 2021
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:
- 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.
- 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.