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The ERTC Tax Credit: What You Need To Know
The Employee Retention Credit, or ERC, was created by Congress in March 2020 as part of the CARES Act—an emergency package of government support for business and communities as COVID-19 began spreading across the United States. 
The ERC is a refundable tax credit that businesses can claim on qualified wages paid to employees, along with certain health care costs, in an effort to keep companies from laying off workers as the pandemic began.
While it was initially offered as an alternative to loans through the Paycheck Protection Program (PPP), more recent legislation has made it available to many more businesses. Future Systems, Inc. has already helped numerous companies claim a combined total of more than $9M through the ERC, and your business might still be eligible, too.
How has the ERC changed over time?
When the CARES Act was initially passed in 2020, employers who opted for a loan through the federal Paycheck Protection Program (PPP) were not allowed to claim the ERC. Since many businesses preferred to take the cash up front, not knowing what the pandemic had in store, many passed on the ERC, despite its generous provisions.
In 2020, qualified employers could claim the credit against 50 percent of qualified wages and certain health expenses paid, up to $10,000 per employee per year. Those numbers increased with the passing of the Consolidated Appropriations Act (CCA) in 2021, with qualified employers now allowed to claim a credit against 70% of qualified wages paid, up to $10,000 per employee per quarter, for the first three quarters the year.
A rule change later allowed businesses that had received a PPP loan to also claim the ERC, providing a lifeline to many companies as the pandemic wore on.
Another change made to the program revolved around its definition of “large” and “small” businesses. While small businesses—defined as those with 100 or fewer full-time employees—could claim the credit for all qualifying wages during a quarter, larger companies could only claim the credit for the times that they were restricted from providing services due to COVID-19.
The CCA changed that definition, allowing companies with 500 or fewer employees to claim the ERC in 2021 for all qualifying wages, this simplified calculations and opened the door for more companies to receive larger tax credits. That could include yours!
How Future Systems can help
Don’t miss your opportunity to file for an ERC refund! The first step will be determining whether your organization or company qualifies for the credits.
While we cannot determine eligibility for all our clients (some are trickier than others!), we are more than happy to explain the requirements, along with your specific scenario. Other input concerning eligibility could come from your CPA or financial advisor.
Once qualification has been determined, we will calculate the credits, amend any returns necessary and file for the credits on your behalf. We will do this on a contingency basis with a small down payment for the services, with the remaining amount due once the credit is received by the employer. In return, we will work with you to calculate these credits, amend the appropriate payroll returns and file with the IRS to claim your credit.
You will receive refund checks from the IRS for each quarter filed. We will provide records to you showing the tax credit calculations so you will have a complete audit trail just in case you ever need it. If a PPP loan has already been used and/or forgiven, we will work with you to isolate those funds to ensure you maximize credits without double dipping.
If you are interested in learning more about this program and how Future Systems, Inc. can help your organization or business, please contact us.