How Does the ERTC Apply to Logistics Companies? 

December 8, 2023
Dayes Law Firm

The ERTC is a tax credit available to companies that experienced a significant decline in gross receipts due to pandemic-related shutdowns. Many transportation and logistics companies experienced disruptions to their operations during the pandemic. However, because these businesses were considered “essential,” most shutdowns didn’t apply to them. 

Is your transportation or logistics company eligible for the ERTC? Learn more about the ERTC for transportation companies and determine whether you are eligible. 

ERTC Eligibility Requirements for Transportation Companies 

To be eligible for the Employee Retention Tax Credit, you must be able to show that your transportation company experienced financial loss due to the pandemic. You’ll need to meet the following requirements: 

Significant Decline in Gross Receipts

The first requirement is that your business experienced a “significant decline in gross receipts” in 2020 and/or 2021 compared to the same quarter in 2019. The definition of a significant revenue decline varies depending on the tax year. 

  • For 2020, a significant decline is 50% or more
  • For 2021, a significant decline is 20% or more

When calculating the ERTC for transportation companies, you should examine your transportation company’s gross receipts for each quarter, including all four quarters in 2020 and the first three quarters in 2021.

Compare each quarter’s receipts against the same quarter in 2019 to determine whether you meet the significant decline threshold. You can claim the tax credit for all quarters that meet this criteria as long as your business is generally eligible. 

Even if your business didn’t experience a significant decline in gross receipts during any quarters, you may still be eligible for the ERTC. You need to show that your business was subject to some sort of government restriction that interrupted your operations during the pandemic. 

Full or Partial Suspension of Operations

Meeting the “full or partial suspension of operations” criterion can be a gray area for transportation and logistics companies. Most trucking companies were exempt from government lockdowns because they are considered essential businesses. 

However, you may still qualify for the credit if you were allowed to stay open but had to modify your operations. The ERTC guidelines specify that if government orders had “more than a nominal effect” on business operations, that business may still qualify. But what is a “nominal effect?” 

For previous IRS tax refunds and credits, a nominal effect is a 10% threshold. Your business may have experienced more than a nominal effect from government orders if you had more than a 10% decrease in employee hours or revenue. 

In contrast, if your business had to modify operations, but you still experienced comparable revenue and were able to maintain employee hours, you likely will not qualify for the ERTC. 

Supply Chain Disruptions 

Businesses may also qualify for the ERTC if they weren’t directly impacted by government shutdowns yet experienced supply chain disruptions due to other businesses within their supply chains suspending operations. 

Few transportation and logistics companies experienced supply chain disruptions. But if yours did, consider this for your tax credit calculation. 

Seek ERTC Assistance From Dayes Law Firm

If your transportation or logistics company qualifies for the ERTC, you could seek up to $26,000 per employee in tax credits. However, you must ensure you meet the eligibility requirements before applying. 

At Dayes Law Firm, our tax attorneys are well versed in the ERTC for transportation companies. We can help you understand whether you meet the intricate eligibility requirements for the ERTC and guide you through the application process. 

Give us a call at (800) 503-2000 or fill out our online form to schedule your free consultation.