Top ERC Misconceptions
April 6, 2023
In March of 2020, federal lawmakers passed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). A comprehensive economic support and stimulus package, the CARES Act includes the Employee Retention Credit (ERC). It is one of the most important but least understood aspects of the law. There are many myths about the ERC. In this blog post, our ERC specialists dispel six of the most common misconceptions about the Employee Retention Credit.
Six Myths and Misconceptions About the Employee Retention Credit (ERC)
Myth #1: You Cannot Get the ERC If You Got a PPP Loan
False. You can absolutely still get the ERC if you got a PPP loan. You can also file for the ERC even if your company never applied for PPP benefits. The PPP and the ERC are distinct economic relief measures. All companies that got the PPP should file for the ERC.
Myth #2: A Business Must Have Been Completely Shut Down to Qualify for the ERC
False. You can qualify for the Employee Retention Credit on the basis of a government shutdown order—but it certainly does not have to be a full shutdown. Partial shutdowns—from cleaning and sanitizing to social distancing to capacity reductions —also count. Virtually every company in the country can qualify for the ERC with us as we have the government orders.
Myth #4: A Company Cannot File for the ERC If it Was In Losses (No Tax Liability)
False. The ERC is a fully refundable tax credit. It is a refund on employment taxes paid during the final three quarters of 2020 and the first three quarters of 2021. A company can qualify for the ERC even if it lost money during a tax year and did not have business tax liability on its profits.
Myth #5: The ERC is Not Valuable Enough to Be Worth Filing for
False. The ERC can provide even greater financial benefits than did the PPP. In fact, a company may qualify for three to seven times as much in ERC funds as it did in PPP funds. There is a maximum benefit available of up to $26,000 per employee when adding up all six quarters.
Myth #6: Non-Profit Organizations Cannot Qualify for the ERC
False. The ERC is not restricted to for-profit businesses. All types of employees can qualify for the ERC, including non-profit entities. Indeed, non-profits are often great candidates for the ERC.
Myth #7: It is Too Late to File for the ERC
False. The ERC allows for companies and organizations to file an amended return. You can still claim the ERC for 2020 or for 2021 in 2022. It is not too late to file for your benefits. Act now.
Sunrise Business Solutions Helps Clients Maximize their ERC Benefit—Guaranteed
At Sunrise Business Solutions, we are proud to help businesses and organizations get the maximum Employee Retention Tax Credit—guaranteed. Our team is backed by Berkshire Hathaway and we exclusively focus on the ERC. If you have any questions about your eligibility, we are more than ready to help you navigate the filing process. Call us at 312-883-1888 or connect with us directly online today. We provide ERC services to businesses and organizations nationwide.