What Are Industry-Specific Guidelines for Claiming the ERTC?

If you’ve heard about the ERTC, or Employee Retention Tax Credit, you may wonder whether your business qualifies. If you’re eligible, this valuable credit could provide up to $21,000 per employee you kept on payroll throughout the COVID-19 pandemic.

A business in any industry can qualify for this credit if it meets the IRS requirements. Below, learn about the ERTC for industry-specific businesses and determine whether yours meets ERTC eligibility requirements.

Does Your Business Qualify?

To be eligible for the credit, your business will have to meet one of these requirements according to IRS guidelines:

• You had a big drop in gross receipts (at least 20% for 2021 and at least 80% compared to the same quarter of the previous year for 2020).
• You had to close at least partially because of a government order limiting commerce, group meetings, or travel.

The IRS doesn’t have industry-specific guidelines for the ERTC, but depending on your industry, you could qualify for the credit in a few different ways. Let’s look at some qualifying industries and Employee Retention Credit examples.

Fitness Centers and Gyms

Gyms and fitness centers were hit hard by the pandemic. Many fitness buffs were reluctant to come into the gym out of fear of spending time in enclosed spaces with other people.

If a government order forced you to close your fitness center or gym, you may qualify for the ERTC.

Businesses that Serve Food and Drinks

Restaurants, bars, pubs, and breweries were some of the hardest-hit businesses during the pandemic. Even if you didn’t have to close your doors completely, a government order may have forced you to limit customers to outdoor seating. If that happened to you, it counts as a partial shutdown, so you’d likely qualify for the ERTC.

Many restaurants also had a big drop in traffic during the pandemic. You might qualify for the credit if you lost customers and had a serious decline in your receipts.

Motels and Hotels

With the government limiting travel in many places, motels and hotels saw a huge drop in customers. Even if the government didn’t shut down your motel directly, you could still qualify for the ERTC based on the gross receipts test.

Nonprofits

Many nonprofits don’t think they qualify for the ERTC because they believe they’re open to for-profit businesses only. However, this isn’t the case. Nonprofits can also qualify for the credit as long as they meet the IRS guidelines.

Franchises

Franchises are in a special category because different requirements apply to them. These include:

• You cannot “double dip” and claim wages for the same employee twice, even if they worked at different franchise locations.
• If one of your franchise locations meets the gross receipts test, but others don’t, they will all still qualify for the credit.
• You must add up the number of employees across all franchise locations. This is important because the IRS could deem you a “large employer.” This affects which wages you can claim the credit for.

How Much Is the ERTC Worth?

If you’re eligible for the ERTC, you can claim up to:

• $5,000 per employee for 2020
• $7,000 per employee per quarter for 2021

However, in September, the IRS announced “an immediate moratorium through at least the end of the year on processing new claims for the pandemic-era relief program” due to increased fraud concerns. 

IRS Commissioner Danny Werfel noted in the announcement, “The IRS is increasingly alarmed about honest small business owners being scammed by unscrupulous actors, and we could no longer tolerate growing evidence of questionable claims pouring in.”

Werfel said that if they pursue claiming the credit, “businesses should seek out a trusted tax professional who actually understands the complex ERC rules.”

Contact Dayes Law Firm for Help Claiming the ERC Credit

Do you need help claiming the ERTC or want to know more about the ERTC for industry-specific businesses? Reach out to Dayes Law Firm at (866) 567-4510 for a consultation on your case today. We’ll let you know whether you qualify and, if you do, help you claim the credit for your business to maximize this generous tax benefit.