What’s ERC ?

The Employee Retention Credit (ERC) is a refundable payroll tax credit for up to $5,000 per employee in 2020 and $28,000 in 2021. This temporary credit was enacted by the Coronavirus Aid, Relief, and Economic Security (CARES) Act and amended by the Consolidated Appropriations Act of 2021 (CAA). On March 11, 2021, the American Rescue Plan Act (ARPA) of 2021 was signed, which further extended the credit through the remainder of 2021. In total, the potential per-employee payroll refundable credit for the combined 2020 and 2021 period is $33,000... Read More

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6 Biggest Misconceptions Regarding CARES Act Employee Retention Credit (ERC) Stimulus

1

We took the PPP and do not qualify.

False. The new stimulus package recently signed into law allows businesses that received Paycheck Protection Program (PPP) loans to also receive the ERC. However, employers may only utilize the ERC towards wages that are not paid for with forgiven PPP proceeds.

2

We are an essential business and therefore we do not qualify.

False. The CARES Act does not make an “essential” versus “non-essential” employer distinction regarding ERC qualification. An essential business can qualify for the ERC either because its operations are fully or partially suspended because of a governmental order, or because gross receipts declined by 20% year-over-year.

3

We were not shut down and stayed open the whole time and therefore do not qualify.

False. If your business had to change operations in any way due to governmental orders OR if gross receipts declined by 20% year-over-year, your business qualifies. A change in operations means extra cleaning or sanitizing, installing/utilizing protective equipment, temperature checks, a change in job roles/functions, and more.

4

Our company’s year-over-year sales did not decline by 20%, therefore do not qualify.

False. Your business needs to either experience a 20% decline in gross receipts OR suspension in operations, not both. Almost every business has been impacted in some way by a national, state, or local governmental order, therefore qualifying the business.

5

We are profitable and therefore do not qualify.

False. We have helped many companies that were profitable in 2020 receive anywhere from thousands to millions of dollars in credits. This includes grocers, manufacturing, logistics companies, and more. If your business has been impacted in some way by the pandemic, you qualify.

6

We are a non-profit company, don’t pay taxes, and do not qualify.

False. Unlike past employee retention credits, this credit also applies to tax-exempt organizations if the operation of the organization is fully or partially suspended due to governmental orders related to COVID-19. Many nonprofit schools, day care centers, counseling centers, ministries, churches, and clubs closed their buildings and/or partially.

Our Team

Jason Dinesen, EA, LPA

Managing Partner

Jason Dinesen EA, LPA has over 15 years of experience and expertise in Taxation. His professional experience includes 11 years in private practice, plus another 4 years working for a third-party administrator of retirement plans. He is a tax nerd who loves helping people alleviate their fear of – and frustration with – taxes. Jason has trained 50K+ professionals on PPP/ERC and related subjects, and has received some great reviews and feedback from attendees.

He had his practice since 2009 and now serve over 200 clients ranging from basic 1040s to all types of business returns. He started his firm as a side business with 3 clients while working a day job in a “cubicle farm” in West Des Moines. The “side business” quickly became something much more than that, and by August of 2011, he had left the cubicle behind and took his own business full-time.

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Imtiaz Munshi, CPA

Managing Partner

Imtiaz Munshi, CPA is Managing Partner at ERC-PPP Tax specialist with over 30 years of experience. He services clients of various sizes across a broad range of industries, specializing Tax and business planning for small-to-medium size businesses. Imitaz possesses in-depth knowledge of operational audits, accounting best practices, compliance requirements, and business tax issues.

Imtiaz experience includes Financial advising to entrepreneurs, entity structuring for new businesses, including IT technology startups, Business Plan, PPM preparation, Commercial transaction structuring. He has also worked extensively with our high education and small business clients, Litigation support and testifying in cases involving bankruptcy, receiverships, divorce, commercial disputes.

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Resources

Case Study

Education

146
Employees

Avg. $13,800
Credit/Employee

$2M
Potential Credits

Manufacturing

370
Employees

Avg. $14,100
Credit/Employee

$5.2M
Potential Credits

Health Care

2000
Employees

Avg. $5,800
Credit/Employee

$11.6M
Potential Credits

Technology

32
Employees

Avg. $14,000
Credit/Employee

$448K
Potential Credits

Finance

71
Employees

Avg. $14,100
Credit/Employee

$944K
Potential Credits

Fees & Deliverables

Our Key Deliverables
Fees (% of ERC Amount) 10%
Engagement Model Working with CPA and Tax Firms
No Set-Up Fees
No Minimum Fees
PPP Documentation and Forgiveness Application interplay and reconciliation with ERC
Line by line calculations of Form 941X amended payroll returns, to claim ERC for prior quarter(s) based on analysis of Taxpayers’ payroll data
Calculate IRS Worksheets per the 941X instructions, to supplement the calculations for the Form 941X
Provide a full reconciliation of the raw payroll data you provided to us, tying out to the ERC calculation
An IRS Audit Ready Microsoft Excel based Pivot Table with drill-down capability, itemizing paycheck by paycheck categorization of both qualifying and nonqualifying ERTC wages, along with the quarterly ERC calculation
Documentation supporting the taxpayer's application for ERC and PPP loan forgiveness and provide you with our calculations and conclusions regarding the respective amounts of eligible expenses
Preparation and filing of Form 941X or working with the payroll processor of the business for them to submit the 941X
engagement letter
( View Sample Deliverables )
Notes

Blogs

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10 Important Things That CPAs Must Know About ERC

The ERC program was established under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. It encouraged businesses not to lay off employees on their payroll..
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10 Ways To Claim ERC For Your Clients

The Employee Retention Credit (ERC) is a programme created in response to the COVID-19 pandemic and economic shutdown. It provides a refundable tax credit to ...
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Employee Retention Credit: A Solution to High Employee Turnover

Economic uncertainty often has a cascading effect on society. First, some business owners are laying off employees as they worry about the future. This results...
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EMPLOYEE RETENTION CREDIT STRENGTHENED AND EXTENDED FOR MORE ECONOMIC RELIEF TO BUSINESSES

To provide financial relief to businesses struggling due to the Covid-19 government restrictions, the US government came up with the Coronavirus Aid...
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ENHANCED EMPLOYEE RETENTION CREDIT FOR BUSINESSES OF ALL SIZE

The CARES Act established two of the most crucial programs for the US population and businesses, namely the Employee Retention Credit...
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COMPREHENSIVE OVERVIEW ON EMPLOYEE RETENTION CREDIT – 2020 & 2021.

The pandemic has caused most small businesses to face tremendous loss in revenue and they continue to face steep challenges. To help them...
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Latest IRS and Treasury Guidance on ERC provides with Safe Harbor

The IRS and the Treasury issued a safe harbor to the employers, allowing them to exclude certain items from their gross receipts solely to determine...
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Latest ERC Guidance Issued by IRS on August, 4th 2021.

Under the Coronavirus Aid, Relief and Economic Support- the CARES Act, the Enhanced Employee Retention Credit (ERC) was introduced to provide a refundable...
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SECRET INTERPLAY BETWEEN ERC AND PPP THAT NO ONE

The comprehensive Coronavirus Aid, Relief, and Economic Security Act (CARES Act) have been updated. New programs were introduced to provide maximum help...

Frequently Asked Questions

The CARES Act's Employee Retention Credit is a fully refundable tax credit. For the 2020 program, the ERC is equal to 50% of qualified wages (including allocable qualified health plan expenses) that eligible employers pay their employees. This applies to wages paid after 3/12/2020 and before 1/1/2021. The maximum amount of wages taken into account with respect to each employee for all calendar quarters is $10,000, so that the maximum credit for an employee is $5,000.
For the 2021 program, the credit is increased to 70%, and the limit is $10,000 per quarter. This means the annual maximum for an employee is $21,000.
The tax credit offsets all withheld federal employment taxes including federal income tax withholding, Employer FICA and Medicare. Any excess credit will be refunded or advanced by the IRS.
Eligible Employers for the purposes of the Employee Retention Credit are those that carry on a trade or business during calendar years 2020/2021, including a tax-exempt organization, that either:
Fully or partially suspends operations by a governmental order, or experiences a significant decline in gross receipts during a calendar quarter when compared to 2019.
The operation of a trade or business may be considered as partially suspended if an appropriate governmental authority imposes restrictions upon the business operations by limiting commerce, travel, or group meetings (for commercial, social, religious, or other purposes)
Qualified wages are compensation provided to employees during an eligible period. An eligible period is either:
  • a) the time during which the trade or business is fully or partially suspended by governmental order, or
  • b) for 2020, any calendar quarter during which gross receipts are 50% less than the amount received during the same quarter of 2019; for 2021, any calendar quarter during which gross receipts are 20% less than the same quarter of 2019.
You apply for the credit on Form 941-X or other applicable payroll filing, such as 943-X or 944-X. It is most frequently received as a cash payment from the IRS, but you may also use it to offset future payroll tax payments.
The Employee Retention Credit is accessed by filing a 941-X Amended Quarterly Payroll Tax return. The deadline for filing 2020 claims is April 15, 2024, and the deadline for filing 2021 claims is April 15, 2025.
The initial analysis to determine your eligibility and approximate credit is completely free. If you file for an ERC with us, our fee is a percentage of the credit to be received. Of that fee, we collect 15% when the work is finished, and the remaining 85% when you receive the credit money.
Like most economic development business tax incentive programs, the Employee Retention Credit has certain complexities that may impact receiving an accurate, optimized, and audit-ready number. It is important to fully document processes and procedures, organize your records, and avoid any risk areas in advance of a potential IRS audit of the claim, which may come years later.
The ERC has numerous issues such as Controlled Group/business aggregation criteria, documenting qualification methodology, coordination with PPP loans, allocating healthcare expenses to the appropriate time periods, etc. Your payroll company does not have all this information, and your accountant or tax professional may not have the specific expertise to ask.
The use of ERC specialists can help prevent disaster and/or leaving money "on the table".
Ans: Perhaps the most complicated aspect of the ERC program, separate businesses under common ownership that meet IRS business aggregation criteria must be evaluated together for eligibility. If the tests are passed, all entities are eligible; if not, none are eligible.
There are, in total, three parties involved in the project. First Party is ERC PPP Tax Specialist, hereinafter referred to as a company. The second party involved is a CPA or Tax firm, hereinafter referred to as "Firm". The third party involved is a Client of the firm interested in taking benefits of the ERC Tax Credits and PPP loans.
We typically partner with CPAs and Tax firms. Usually, we don't work with the businesses* unless requested explicitly by CPAs or Tax firms.
We sign an engagement with CPAs, CPA Firms, or Tax Firms. We charge fees from the firm and not from the client.
In cases where we sign an engagement with businesses, we charge fees from businesses. However, CPA or tax firms remain involved in providing the data/ information or clarification needed.
We raise the invoice after the accomplishment of the deliverables to the firm or business. Sample deliverables are enclosed herewith. We charge a fee as a percentage (%) of the ERC Credits availed by the client,
  • Firms: 10% of the ERC amount
  • Businesses*: 15% of the ERC amount
  • Preliminary review to see if the client qualifies for the ERC credit (at no charge).
  • Detailed workpapers documenting the qualification of the taxpayer for ERC purposes and the eligibility of wages and salaries used in the calculations.
  • Detailed workpapers documenting the ERC calculations, including employee-by-employee analysis of amounts applied towards PPP forgiveness versus ERC.
  • Organization of the backup documents that would be required in the event of an IRS audit.
  • Line by line instructions for claiming the ERC on amended Forms 941-X.
  • Our turnaround time is typically 10 business days after all the required data is received.
    • Note:
  • "IRS audit ready" is defined as data in a presentable format(Excel Word Sheet), that can be provided to the IRS or any other governmental agency, for purposes of verifying the timing, amount, employee, and specific wage base applied to each credit or PPP Loan forgiveness program.
  • The deliverables should not be considered comprehensive, as the IRS or any other governmental authorities could require additional verification outside of the data in the deliverables (ex. Paper receipts of expenditures, canceled checks)."
  • IRS audit ready" does not indicate any guarantee or assurance as to the outcome of any audit, only that the data is presented in such a way to facilitate an efficient audit.
The payment terms would be to pay within seven days of invoice. We raise the invoice after the accomplishment of the deliverables to the firm or business.
We don't charge any upfront or fixed fees. We charge fees based on the listed accomplishment of the deliverables. We charge a fee based on % of the ERC benefits availed by the firms/ businesses.
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