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The ERC credit program was originally introduced as part of the CARES Act of 2020 and was later expanded in the Taxpayer Certainty and Disaster Tax Relief Act of 2020 which was enacted on December 27, 2020.

Through this, the law extended ERC through 2021, significantly expanded the credit available to employers, and relaxed the eligibility requirements. Most importantly, the law allows companies to retroactively take advantage of 2020 ERC even if they received PPP1 or PPP2. (Previously, you were not able to take advantage of ERC if you received a PPP loan.)

Eligible companies can receive refunds up to $26,000 per each employee paid qualified wages. A max of $5,000 per employee in 2020 and a max of $21,000 in 2021 ($7,000 per employee for the first 3 quarters of 2021).

ERC is available to both for-profit and nonprofit employers who pay W-2 wages . To qualify a company must experience, either:

1) A partial or full government shutdown. (The ERC is available only for wages paid during the shutdown.)


2) A decline in revenue:

For 2020 – a 50% decline in revenue in a quarter relative to the comparative quarter in 2019

For 2021 – a 20% decline in revenue in a quarter, relative to the comparative quarter in 2019. Alternatively, in 2021, eligibility can be established based on the previous quarter’s 20% decline in revenue, relative to its comparative quarter in 2019.


3) Recovery Start-up Business: A business that was started after February 15, 2020 automatically qualifies for Q3 and Q4 of 2021, assuming that the new business’ gross receipts from the new business or any other old business do not exceed and average of $1,000,000 over the past three years.

Yes! You may be eligible for ERC even if you received PPP1 or PPP2 but not for the “payroll costs” funded with a forgiven PPP loan.

Unfortunately, for owners of businesses who pay themselves, W-2 are not allowed to claim ERTC for themselves

In addition to owners wages being excluded from ERC, any relatives of owners who are on payroll are excluded as well. This includes, but is not limited to parents, siblings, children, nieces, nephews, grandchildren, grandparents, aunts, uncles, etc.

In our experience we see the IRS taking about 6-8 months to process the returns.

The Employee Retention Tax Credit Refund is run through the IRS and works differently than the SBA’s PPP. Mainly, there is no approval process like the SBA. What does that mean with respect to ERC? What it means is that the IRS is relying on businesses in two ways; 1) to self-certify which quarters they are eligible for, and 2) to calculate and claim the proper amount.

When a business submits its 941x to the IRS, the IRS will automatically process it and pay that money out to the business without questions. However, like the PPP, the ERC is subject to audit and there is a possibility that the IRS will audit a companies ERC. That is why it is integral to use a professional like ERC Funding.

No. The ERC is NOT a loan, and it is not a forgivable loan like the PPP. The ERC does not need to be paid back and nor does it have to be used specifically on payroll, utilities, rent or mortgage. The money can be used however the business sees fit as it is a refund of money that you already spent.