My revenue increased or stayed the same over Covid, can I still qualify for ERC?
Determining Eligible Employers
Study
How do you determine who is an Eligible Employer?
Eligible Employers for the purposes of the Employee Retention Credit are employers that carry on a trade or business during calendar year 2020 or 2021, including tax-exempt organizations, that either:
- Fully or partially suspend operations during any calendar quarter in 2020 or the first three quarters in 2021 due to orders from an appropriate governmental authority limiting commerce, travel, or group meetings (for commercial, social, religious, or other purposes) due to COVID-19; or
- Experienced a significant decline in gross receipts during the calendar quarter.
See also Who is an Eligible Employer?
Insights & Perspectives
ERC Prep’s experience is that more companies claim ERC by taking the position that their operations were fully or partially suspended due to government orders that limited commerce, travel, or group meetings. Very few companies claim that they experienced a significant decline in gross receipts.
- Practically speaking, companies that experienced ‘a significant decline in gross receipts’ (more than 50% decline in gross receipts quarter over quarter between 2019 and 2020; 20% quarter over quarter decline between 2019 and 2021) are less likely to still be operating as a business today.
- For many of those companies, sadly, the financial relief available today through the ERC Program was not timely enough for them.
See also IRS Notice 2021-20, Guidance on the Employee Retention Credit under Section 2301 of the Coronavirus Aid, Relief, and Economic Security Act (see Section D).
Kept employees during the Pandemic?
Claim your Payroll Tax Refund of up to $26,000 per employee
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