Even though the Employee Retention Tax Credit (ERTC/ERC) has been around for quite a while now, there may still be lingering questions for a lot of business owners who haven’t yet applied for it. Employers who haven’t yet claimed this tax credit may not know how the ERTC applies to businesses that were temporarily closed or had reduced operations, and may even be avoiding applying for it because they don’t know if their business qualifies as a result of such actions. 

What is the ERTC?

The Employee Retention Tax Credit is a fully refundable tax credit implemented via the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), which passed into law on March 27, 2020.

The tax credit is available to eligible employers that paid qualified wages to some or all employees after March 12, 2020, and before January 1, 2022, according to the IRS. The agency also noted that it is “for businesses that continued to pay employees while shut down due to the COVID-19 pandemic or had significant declines in gross receipts” during those early months of the pandemic.

To qualify for the ERTC for tax years 2020 and 2021, a business needs to have experienced what the IRS considers a substantial decline in gross receipts compared with the same calendar quarter in 2019. The tax credit is available to employers that underwent either a full or partial shutdown of operations due to a governmental order related to the coronavirus pandemic. 

How the ERTC Impacts Businesses That Were Temporarily Closed 

Even businesses that were only temporarily closed can qualify for the ERTC tax credit if they paid qualified wages to employees for 2020 and 2021. Temporary company closures could’ve still been impacted by government restrictions and experienced a significant drop in gross receipts, making them potentially eligible to apply for the credit. 

Businesses that closed completely may not be eligible for the ERTC, however. Sadly, some businesses didn’t reopen because of financial strain during the pandemic or for other reasons. Businesses that closed permanently that don’t have qualified wages paid to employees during certain quarters of the 2020 and 2021 tax years to claim would not be able to apply for the Employee Retention Tax Credit. 

It’s simple, really: If your business was closed during eligible periods and you did not pay qualified wages during those periods, your business is not eligible to claim the ERTC, since the tax credit cannot be claimed for those wages.

ERTC Tax Credit Assistance

If you are still unsure whether or not your business can apply for the ERTC, it might be a good idea to ask an experienced tax professional for assistance. The team at Dayes Law Firm may be able to help. 

The knowledgeable staff members at Dayes Law Firm and our partners can help you determine your ERTC eligibility even if your business is now closed. In fact, we have already worked with our partners to help many businesses apply for over $250 million in Employee Retention Tax Credit claims to date. Our tax attorneys would be more than happy to try to assist you with your application, too. 

Please contact us today by calling (800) 503-2000 or by filling out the form on this page to set up a free, no-obligation consultation to discuss the needs of your business when it comes to the ERTC. You owe us nothing if we do not recover a refund for you, and there is no obligation to work with our firm after that meeting. Give Dayes Law Firm a call to learn more today!