Don’t Procrastinate Filing the Employee Retention Tax Credit

August 24, 2023
Dayes Law Firm

Being a business owner is taxing work. You stare at your long list of to-dos and know some things just have to wait. While it may not seem like it needs to be an immediate priority, filing for the Employee Retention Tax Credit should move up your list.

The Employee Retention Credit (ERC) helps businesses recover from the financial decline they experienced during the COVID-19 pandemic. The longer you wait to file, the more you’ll face ERTC procrastination pitfalls. 

What Is the Employee Retention Tax Credit?

The ERTC is a tax credit available to qualifying business owners who suffered losses during the pandemic. Between government-ordered shutdowns, reduced hours, and a slowed supply chain, businesses were struggling. 

The more businesses that went under, the more people lost their jobs. With unemployment on the rise, the government had to step in.

Introduced through the 2020 CARES Act, the tax credit encouraged businesses to keep employees on their payroll. This refundable tax credit rewarded employers by paying them back a portion of their employees’ qualifying wages and healthcare benefits.

The credit underwent various modifications, with the final one taking place when Congress passed the Infrastructure Investment and Jobs Act (IIJA), which terminated the program earlier than planned.

Do I Qualify for the ERTC in 2023?

To avoid the ERTC procrastination pitfalls, the first thing to do is determine whether you’re eligible for the credit. To qualify for the ERTC, your business had to operate in 2020 and 2021. 

While businesses previously could not qualify for the ERTC if they accepted a PPP loan, the American Rescue Plan Act reversed that.

When reviewing your records from those years, check whether you meet one of the following requirements. 

Gross Receipts Test

Start by calculating your loss of revenue. A 50% loss of revenue in 2020 when compared to the corresponding quarter in 2019 makes you eligible for that year. For 2021, you must have seen a 20% loss per quarter when compared to the correlating quarter in 2019.

Suspension of Operations Test

The second way to qualify for the ERTC is by proving you had to suspend normal business operations (partially or fully) in response to a government order. If you had to move to a remote setting, reduce business hours, or halt business for extended periods, you may qualify for the ERTC.

Stop Procrastinating: Deadlines for Filing the ERTC

Although the program ended early in September 2021, business owners can still retroactively file the ERTC in 2023 by amending their previously filed tax Form 941 with Form 941-X. 

The deadlines to file are:

  • April 15, 2024, for eligible quarters in 2020
  • April 15, 2025, for eligible quarters in 2021

Because Congress terminated the program earlier than expected, you can only file for the first three quarters of 2021.

While these deadlines may appear far away, waiting until the last minute is never a good idea. Filing for the ERTC requires proper records and documentation. This can take time to find. It takes months for the IRS to process the claim and up to a year for you to collect the refund.

The longer you wait to file, the longer you’ll wait for your money.

Ready To File the ERTC? Contact a Professional Tax Attorney

Don’t risk suffering from the ERTC procrastination pitfalls. If you’ve been putting this task off because of its time commitment or complexity, hiring a tax attorney can help streamline the process.

At Dayes Law Firm, we’ve helped hundreds of businesses file for the ERTC and receive more than $250 million. Don’t wait any longer — you could be next. Call (866) 567-4510 to schedule a free consultation today.