• The applicable threshold amount for the 2020 ERC is 100 or fewer full-time employees (as counted in 2019).
• The applicable threshold amount for the 2021 ERC is 500 or fewer full-time employees (as counted in 2019).
• For the 2020 ERC, a “small employer” is an employer that had an average of 100 or fewer full-time employees (as counted in 2019). Exceeding that amount results in large employer classification.
• For the 2021 ERC, a “small employer” is an employer that had an average of 500 or fewer full-time employees (as counted in 2019). Exceeding that amount results in large employer classification.
With our ERC Calculator, you can quickly see if your business qualifies to receive ERC.
The ERC is a refundable tax credit for employers introduced early in the COVID-19 pandemic to help employers keep their employees on payroll.
There are three steps to applying for the ERC.
As of April 15, 2024, businesses can no longer claim qualified wages paid during 2020.
However, qualified wages paid during 2021 can still be claimed until April 15, 2025.
The IRS has currently placed a processing moratorium on ERC claims which has caused significant delays. It may take over 8 months to receive your ERC refund at this point.
If you incorrectly claimed the ERC and received a refund, you may have to repay it with possible interest or penalties.
If your claim has not yet been processed or paid, you may be able to withdraw your claim.
The process by which you can withdraw your claim depends on whether your claim is under audit and whether you have already received your refund.
Read our article, “IRS Releases ERC Withdrawal Process Details”, for a more thorough explanation.
The IRS has been mailing Letter 6612 to employers with pending ERC claims as a notice that the organization is auditing your tax return claiming the ERC refund. Any refund will be held until the audit is concluded.
Read our article, “IRS Rapidly Increasing ERC Examinations by Sending Letter 6612 to Employers”, to learn more.
Some ways to expedite the processing of the Employee Retention Credit is by filing a refund lawsuit or utilizing the Taxpayer Advocate Service.
Read more about these methods and whether you can use them in our article, “Expediting your ERC Refunds with the IRS”.
A notice of disallowance states that all or part of a refund is disallowed. A taxpayer has 30 days from the date on the notice of disallowance to appeal.
Read more about what should be included in your appeal and what to expect after it in our article, “Appealing the Disallowance of ERC Refund Claim”.