The Internal Revenue Service issued a renewed warning urging people to carefully review the Employee Retention Credit (ERC) guidelines before trying to claim the credit as promoters continue pushing ineligible people to file. The IRS continues to see third parties aggressively promoting these ERC schemes on radio and online. These promoters charge large upfront fees or a fee that is contingent on the amount of the refund. And the promoters may not inform taxpayers that wage deductions claimed on the business' federal income tax return must be reduced by the amount of the credit. "While this is a legitimate credit that has provided a financial lifeline to millions of businesses, there continue to be promoters who aggressively mislead people and businesses into thinking they can claim these credits. Anyone who is considering claiming this credit needs to carefully review the guidelines. If the tax professional they're using raises questions about the accuracy of the Employee Retention Credit claim, people should listen to their advice. The IRS is actively auditing and conducting criminal investigations related to these false claims. People need to think twice before claiming this." The IRS has been warning about this scheme since last fall, but there continue to be attempts to claim the ERC during the 2023 tax filing season. Tax professionals note they continue to be pressured by people wanting to claim credits improperly. People and businesses can avoid this scheme, and by not filing improper claims in the first place. If the business filed an income tax return deducting qualified wages before it filed an employment tax return claiming the credit, the business should file an amended income tax return to correct any overstated wage deduction. Businesses should be cautious of advertised schemes and direct solicitations promising tax savings that are too good to be true. Taxpayers are always responsible for the information reported on their tax returns. Improperly claiming the ERC could result in taxpayers being required to repay the credit along with penalties and interest. The ERC is on the IRS Dirty Dozen list and based on my discussions with IRS personal they are starting to audit businesses that claimed the deductions. Do something now before it is too late.
In your 2020 decline in gross receipts graph shows second and third quarters as being 40 and 48% shouldn’t those numbers be 60 and 52% decline making them eligible. I don’t understand why you have 40 and 48% in there. Please clarify thank you
In Q3 and Q4 2021, there is a Recovery Startup provision available to smaller companies who started the business after Feb 2020. Do you have any information or a video regarding this?
I just got approval for my first ppp loan forgiveness from 2020 but did not claim any ERC for 2020. Can I still go back now in June 2021 to claim those credits for 2020 outside of PPP payroll expense? I already filed 2020 business tax btw. Thank you.
Yes! You still have time to go back and claim a credit in 2020 for, assuming the company meets the full/partial closure test or the 50% revenue reduction test. Just be sure you don’t “double dip” when you calculate the amount of ERC. If you have filed your 2020 federal income tax return, you may need to amend that return since any credit claimed would result in a reduction in tax deductible wage expenses.
At 21:28 the video mentions code section 51(i)1 that individuals related to a more than 50% owner are not qualified. I have read through the instructions for form 7200 and don't see anything prohibiting family member employees. Can you confirm this or point me in the direction to verify it? Thing is, I have 2 brothers that have been employees for a number of years and I'm scratching my head about why their wages would not be qualified.
If I had to guess, I would say it's because you could easily put family on payroll for whatever pay you want and get easy money back. I am in the same boat though. My wife and father work for my company. I excluded them and myself, despite everyone making typical wage. Better safe than sorry in this instance imo.
The company that I am working for has more than 500 employees in each quarter. Do we qualify for ERTC? I read for 2021 the threshold is 500 employees. If the total employees are above the threshold, only wages paid to employees that didn't provide services qualify for an employer who qualifies for ERTC (exceptions do exist). I don’t quite understand about that information. Could you please explain more? We don't have PPP, and we qualify for 20% decline in gross receipt of 2021 quarter 1 test. Thanks and appreciate your help!
As we know, for 2020 a significant declines in gross receipt you are eligible entire of quarter through the end of quarter when you get back to your normal, so is it applied for significant decline in gross receipts of 2021 ERC as well? Thanks a lot!
In your 2020 ERC eligibility example, the employer's revenue drop (> 50%) qualified them for Q2 & Q3, but ALSO for Q4 2020. Would the same logic apply in 2021? I.e., if I'm eligible for Q1 2021 solely based on look back, would I automatically be eligible for Q2 2021 even though I wouldn't qualify based solely on revenue? I can't find a legal reference anywhere to use this logic in applying for Q2 2021 ERC.
Yes, it works that way in 2021 as well. The guidance allows an alternate calculation that uses prior quarter revenue compared to the same quarter in 2019. This means that in Q1 of 2021 a company can be eligible by comparing Q1 2021 to Q1 2019 or Q4 2020 to Q4 2019. If you'd like specific guidance on your situation please contact us at marketing@bvccpca.com and we will be happy to help.
Excellent presentation. I've gone thru at least 20 other videos that attempts to explain it and this video is by far the most thorough. Regarding Section 51(i)1, I am still confused about why a S or C corp will be denied retention credit for wages paid to family member of 50% or more while a limited liability company or partnership, it must be more than 50%. Said another way, if I have a family owned business and the two partners (50% ownership equally) are married. Does that mean, wages paid to related family members (say their son/daughter) will be allowed b/c each of the 2 partners/owners owns only 50%?
Very informative video, Thank you! One question, you mentioned a client having a very sizeable credit for 1st qtr 2021, isn't there a max $50,000 limit for 2021 credits?
Hello, Thank you for your videos. I sent 941-X for ERC and I received a CP210 form with a $zero" balance for my ERC . Have any of your clients received anything similar? I tried calling the IRS but they do not answer the phones due to the high call volume Thank you.
Is there a different process for farmers that employ seasonal labor?
Thank you
Has the ERC money been paid to anyone yet? Have you gotten IRS requests because you filed for the ERC?
The Internal Revenue Service issued a renewed warning urging people to carefully review the Employee Retention Credit (ERC) guidelines before trying to claim the credit as promoters continue pushing ineligible people to file.
The IRS continues to see third parties aggressively promoting these ERC schemes on radio and online. These promoters charge large upfront fees or a fee that is contingent on the amount of the refund. And the promoters may not inform taxpayers that wage deductions claimed on the business' federal income tax return must be reduced by the amount of the credit.
"While this is a legitimate credit that has provided a financial lifeline to millions of businesses, there continue to be promoters who aggressively mislead people and businesses into thinking they can claim these credits. Anyone who is considering claiming this credit needs to carefully review the guidelines. If the tax professional they're using raises questions about the accuracy of the Employee Retention Credit claim, people should listen to their advice. The IRS is actively auditing and conducting criminal investigations related to these false claims. People need to think twice before claiming this."
The IRS has been warning about this scheme since last fall, but there continue to be attempts to claim the ERC during the 2023 tax filing season. Tax professionals note they continue to be pressured by people wanting to claim credits improperly.
People and businesses can avoid this scheme, and by not filing improper claims in the first place. If the business filed an income tax return deducting qualified wages before it filed an employment tax return claiming the credit, the business should file an amended income tax return to correct any overstated wage deduction.
Businesses should be cautious of advertised schemes and direct solicitations promising tax savings that are too good to be true. Taxpayers are always responsible for the information reported on their tax returns. Improperly claiming the ERC could result in taxpayers being required to repay the credit along with penalties and interest. The ERC is on the IRS Dirty Dozen list and based on my discussions with IRS personal they are starting to audit businesses that claimed the deductions. Do something now before it is too late.
Would you be able to do a video on how to Amend 2020 form 941 in order to claim the ERC?
Excellent, very detailed.
Which boxes are you checking on 941x parts 1 and 2 when claiming the ERC? Thanks!
In your 2020 decline in gross receipts graph shows second and third quarters as being 40 and 48% shouldn’t those numbers be 60 and 52% decline making them eligible. I don’t understand why you have 40 and 48% in there. Please clarify thank you
Excellent info. I would just pay this accountant to do all the work
In Q3 and Q4 2021, there is a Recovery Startup provision available to smaller companies who started the business after Feb 2020. Do you have any information or a video regarding this?
Hey Steve, we are planning to shoot an updated ERC video this coming Friday as there have been several changes. Hopefully have it out next week.
I just got approval for my first ppp loan forgiveness from 2020 but did not claim any ERC for 2020. Can I still go back now in June 2021 to claim those credits for 2020 outside of PPP payroll expense? I already filed 2020 business tax btw. Thank you.
Yes! You still have time to go back and claim a credit in 2020 for, assuming the company meets the full/partial closure test or the 50% revenue reduction test. Just be sure you don’t “double dip” when you calculate the amount of ERC. If you have filed your 2020 federal income tax return, you may need to amend that return since any credit claimed would result in a reduction in tax deductible wage expenses.
@@HoustonAccountingCPA thank you
At 21:28 the video mentions code section 51(i)1 that individuals related to a more than 50% owner are not qualified. I have read through the instructions for form 7200 and don't see anything prohibiting family member employees. Can you confirm this or point me in the direction to verify it? Thing is, I have 2 brothers that have been employees for a number of years and I'm scratching my head about why their wages would not be qualified.
If I had to guess, I would say it's because you could easily put family on payroll for whatever pay you want and get easy money back. I am in the same boat though. My wife and father work for my company. I excluded them and myself, despite everyone making typical wage. Better safe than sorry in this instance imo.
The company that I am working for has more than 500 employees in each quarter. Do we qualify for ERTC? I read for 2021 the threshold is 500 employees. If the total employees are above the threshold, only wages paid to employees that didn't provide services qualify for an employer who qualifies for ERTC (exceptions do exist). I don’t quite understand about that information. Could you please explain more? We don't have PPP, and we qualify for 20% decline in gross receipt of 2021 quarter 1 test. Thanks and appreciate your help!
As we know, for 2020 a significant declines in gross receipt you are eligible entire of quarter through the end of quarter when you get back to your normal, so is it applied for significant decline in gross receipts of 2021 ERC as well? Thanks a lot!
In your 2020 ERC eligibility example, the employer's revenue drop (> 50%) qualified them for Q2 & Q3, but ALSO for Q4 2020. Would the same logic apply in 2021? I.e., if I'm eligible for Q1 2021 solely based on look back, would I automatically be eligible for Q2 2021 even though I wouldn't qualify based solely on revenue? I can't find a legal reference anywhere to use this logic in applying for Q2 2021 ERC.
Yes, it works that way in 2021 as well. The guidance allows an alternate calculation that uses prior quarter revenue compared to the same quarter in 2019. This means that in Q1 of 2021 a company can be eligible by comparing Q1 2021 to Q1 2019 or Q4 2020 to Q4 2019. If you'd like specific guidance on your situation please contact us at marketing@bvccpca.com and we will be happy to help.
Excellent presentation. I've gone thru at least 20 other videos that attempts to explain it and this video is by far the most thorough. Regarding Section 51(i)1, I am still confused about why a S or C corp will be denied retention credit for wages paid to family member of 50% or more while a limited liability company or partnership, it must be more than 50%. Said another way, if I have a family owned business and the two partners (50% ownership equally) are married. Does that mean, wages paid to related family members (say their son/daughter) will be allowed b/c each of the 2 partners/owners owns only 50%?
Very informative video, Thank you! One question, you mentioned a client having a very sizeable credit for 1st qtr 2021, isn't there a max $50,000 limit for 2021 credits?
Max is $26K per W2 employee is all.
where do we apply for this ? is there a website?
Yes! ercspecialists.com/?fpr=sonya50
I need help for my busines pleased ?
if anyone would like me to just file this for them i am available
This is an excellent presentation!!
Hello, Thank you for your videos. I sent 941-X for ERC and I received a CP210 form with a $zero" balance for my ERC . Have any of your clients received anything similar? I tried calling the IRS but they do not answer the phones due to the high call volume Thank you.