For business owners who may be used to other tax credits and employment incentives, the newness of the Employee Retention Tax Credit (ERTC/ERC) may make it a bit daunting or confusing. Let’s take a look at some of the ways the ERTC compares to other employment incentives to clear up some of that confusion.
How the ERTC Compares to Different Employment Incentives
Businesses that experienced fully or partially suspended operations due to government orders during the early months of the COVID-19 pandemic or that encountered a significant decline in gross receipts between March 2020 and December 2021 when compared to the same quarter in 2019 may be eligible to claim the ERTC.
The Employee Retention Tax Credit was implemented as an employment incentive for businesses that kept W2 workers on staff even as business owners experienced major financial setbacks during the height of the pandemic. But it’s not the only government program out there that’s meant to help businesses.
The ERTC is different from some other government incentives business owners may be familiar with because it is a refundable tax credit. It is not an income tax credit and isn’t issued as that type of tax credit the same way other tax credits may be. It is sent as a direct reimbursement to businesses to help them financially in the wake of economic uncertainty due to the pandemic.
One important way the ERTC compares to other employment incentives from the government is it hasn’t been expanded to continue into 2022 or 2023, or been made permanent. The Work Opportunity Tax Credit (WOTC), by comparison, was created in 1996 and has been extended quite a bit since. As of now, the WOTC is authorized until December 31, 2025.
The ERTC also differs from another COVID-19-era government program called the Paycheck Protection Program (PPP). PPP loans are forgivable loans, and an NPR analysis of data released in January 2023 from the Small Business Administration found that more than 90 percent of PPP loans issued were granted full or partial forgiveness.
Both the PPP and the Employee Retention Tax Credit were designed to provide a direct incentive for small businesses to keep workers on payroll. But the Paycheck Protection Program has ended, while the deadline to apply for the Employee Retention Credit for all quarters in 2020 is April 15, 2024. For all quarters in 2021, the deadline is April 15, 2025.
Getting ERTC Assistance from Dayes Law Firm
Even if you have a slightly better understanding now of how the ERTC compares to other employment incentives, the idea of supplying all the documentation, paperwork, and information to make your Employee Retention Tax Credit claim may seem overwhelming. Especially for small business owners with a million tasks on their agenda, the idea of pursuing the ERTC may feel like an immense undertaking.
When it comes to applying for the ERTC, Dayes Law Firm can help. In fact, our team and our partners have helped other businesses with filing for more than $250 million in ERTC refunds so far. We can work with you every step of the way to make sure you are eligible to apply for the ERTC and, if you are, to ensure that you get the maximum ERTC refund your business is entitled to.
Please call us at (800) 503-2000 for a free, no-obligation consultation to discuss your ERTC application needs. We’d be more than happy to answer any questions you may have about the process. Feel free to get in touch with the Dayes Law Firm team today to learn more!