Can a Closed Business Apply for the ERTC?

July 5, 2023
Dayes Law Firm

Even though the Employee Retention Tax Credit, also known as the ERC or ERTC, has been around for a couple of years – in fact, it was created via the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) in March 2020 – there are understandably still some questions business owners may have about the program. Whether or not a closed business can apply for the ERTC may be one of them.

ERTC Overview

In short, the ERTC is a refundable payroll tax credit. Businesses can claim it on qualified wages paid to their employees if they kept staff on even in the face of substantial financial setbacks during the height of the COVID-19 pandemic in 2020 and 2021.

Quarterly payroll tax filings from 2020 and 2021 qualify for the ERTC. The time period in which your business operated and paid wages matters significantly when it comes to a closed business being able to apply for the ERTC.

Closed Businesses Applying for the ERTC

Many businesses suffered during the COVID-19 pandemic, particularly small businesses with tight margins. Thankfully, although some of those businesses may have temporarily had to shut down during the first several months of the coronavirus public health emergency, they may have also been able to open up once more after COVID restrictions were lifted.

The good news is, businesses that temporarily closed due to COVID-19 may be eligible to apply for the Employee Retention Tax Credit! If your business dealt with those circumstances but is open now, you should undoubtedly talk to a trusted tax professional about your ERTC options

But if your business closed and did not reopen, that’s when things get a little more complicated.

ERTC and Closed Business Eligibility 

If you are unsure about the status of your business’ eligibility to apply for the ERTC, it’s never a bad idea to turn to an experienced tax professional for assistance. But in general, there are some guidelines regarding closed businesses applying for the ERTC. 

If your business operated during Q2, Q3, or Q4 of 2020 or during the first three quarters of the year 2021, you can likely claim the ERTC for periods you are eligible to do so. Definitely check with your tax advisor to be sure, but if you are eligible and haven’t claimed the ERTC refund, you may be leaving money on the table!

However, that probably makes the other scenario here a bit more clear: If your business was closed during eligible periods and you did not pay qualified wages, you are not eligible to claim the ERTC, since the tax credit would be claimed for those wages. 

Call Dayes Law Firm for ERTC Assistance 

Businesses that were fully or partially closed due to COVID-19 government orders may be eligible to apply for the ERTC. If you’re a business owner and you’re really unsure of whether or not you’re qualified to apply, please don’t hesitate to contact Dayes Law Firm for assistance. 

The team at Dayes Law Firm and our partners can work with you to determine your ERTC eligibility even if your business is now closed, and we are committed to giving your business the best chance at getting the highest potential tax credit refund if you do qualify to apply. 
Please feel free to contact us today by calling 1-866-875-1005 or by filling out the form on this page to see how we can help! We can offer a free, no-obligation consultation, and are always available to discuss your specific ERTC situation. Call today to learn more!