While you may have heard about the Employee Retention Tax Credit by now, especially given the fact that there seem to be ads for it everywhere these days, not every business owner who could take advantage of the program may know enough about it to know that they can still apply for it. Even the most popular acronyms for the credit can be confusing – ERTC or ERC. Are they the same thing?
What is the Employee Retention Tax Credit?
The Employee Retention Tax Credit is a refundable payroll tax credit certain businesses can claim on qualified wages paid to employees if they kept staff on their payroll in spite of major financial setbacks during the early days of the COVID-19 pandemic, back in 2020 and 2021.
Initially, the credit was for eligible wages paid between March 12, 2020, and December 31, 2020. The Consolidated Appropriations Act (CAA) extended the length of the program for the first time, through June 30, 2021.
The American Rescue Plan Act of 2021 (ARPA) extended the Employee Retention Tax Credit again, this time through December 31, 2021. But the Infrastructure Investment and Jobs Act later changed the dates of the extension and, for many businesses, the new legislation meant the credit applied to wages paid through September 30, 2021, rather than through November.
However, Recovery Startup Businesses were still eligible to claim the Employee Retention Tax Credit for wages paid after June 30, 2021, and before January 1, 2022.
The tax credit is available to employers that encountered a full or partial shutdown of operations due to a governmental mandate related to COVID-19, or if a business experienced a decline in gross receipts in 2020 or 2021 when compared to the same quarter in 2019. If you’re unsure of your business’s specific eligibility, a team of tax professionals like the ones at Dayes Law Firm can help you determine if your business qualifies.
Is there a Difference Between the ERC and the ERTC?
Nope! Not technically, in any case. ERC is short for Employee Retention Credit and ERTC is short for Employee Retention Tax Credit. Ultimately, they both refer to the same federal tax credit program. It’s mostly a matter of preference which term companies dealing with the ERTC and tax attorneys assisting with applying for the program use when discussing it with clients.
However, there are differences when it comes to ERTC eligibility when claiming wages for 2020 vs. 2021. A tax professional experienced in helping companies claim the ERTC can help you work out those particulars.
If you have any additional Employee Retention Credit questions, please feel free to contact our firm for assistance. Dayes Law Firm and our partner firms have already helped many business owners apply for the ERTC and file more than $250 million in tax credit claims.
We offer a free, no-obligation consultation to discuss any of your ERTC needs. Fill out the form on this page or give us a call at (800) 503-2000 to speak with a Dayes Law Firm ERTC professional and learn more about the tax credit today!