What Innovative Strategies Are Possible to Claim the ERTC?

December 2, 2023
Dayes Law Firm

By now, you have probably heard plenty of buzz about the Employee Retention Tax Credit (or ERTC for short). This federal tax credit allows small businesses to claim up to $26,000 per employee if they kept their staff on payroll during the height of the COVID-19 pandemic in 2020 and 2021. 

So far, the IRS has received approximately 3.6 million claims, ranging from a few thousand dollars to millions of dollars. If you’re looking to maximize your claim eligibility, keep reading for innovative strategies to do so.

About the Employee Retention Tax Credit 

The ERTC was part of the 2020 Coronavirus Aid, Relief, and Economic Security Act. The goal of this Act was to help businesses survive the disastrous effects of the COVID pandemic by providing loans, financial incentives, and other resources for businesses affected by shutdowns and depressed economic activity. 

Eligibility hinged on a business retaining its workers (or at least continuing to pay them) and being subject to one of the following two circumstances: 

  1. A decline in gross receipts of 50% in 2020 and 20% in 2021 compared to the same period in 2019, which is determined on a quarterly basis
     
  2. A full or partial suspension of operations as a direct result of a COVID-related government mandate 

Since the passage of the CARES Act and the implementation of ERTC, several updates to the rules of the credit have been made. Therefore, if you haven’t claimed your ERTC yet, or you are eligible for additional funds as a result of rule updates, you can amend your Form 941 employment tax returns by filing Form 941-X

Note that you might also see ERTC referred to as Employee Retention Credit (ERC). The two terms are synonymous. 

Innovative Strategies for Maximizing Your Credit 

There’s no question that the rules surrounding claiming the maximum funds eligible employers can receive under ERTC are complicated. Here are some helpful tips to ensure you’re getting the maximum amount your business is eligible to receive. These ERTC tax strategies could yield a difference of thousands or hundreds of thousands of dollars. 

Use Data Analytics Tools 

Compiling all of the data to determine eligibility can be daunting. Using software can help, especially if your different systems communicate with each other. When you can pull all of the data easily, it will streamline your ability to determine the funds you are eligible to claim. 

Coordinate With Other Relief Programs 

The CARES Act included several other relief programs, some of which had an effect on your ability to receive ERTC funds. For example, in the early iterations of the ERTC, you could not claim the credit if you received a loan from the Paycheck Protection Program (PPP). 

Now, however, you can still benefit from both programs. There is one caveat, however. The PPP funds you received for wages cannot be claimed for the ERTC, as that would be double-dipping. On the other hand, the PPP funds that were allocated toward rent and other authorized expenses will not count against you. 

File a Retroactive Claim 

Perhaps one of the best ways to maximize these tax credits is to review the retroactive provisions pertaining to the ERTC. Since its inception, the tax credit maximums have increased, and some of the rules have become more permissive. 

Whether filing for the first time or refiling to claim credits retroactively, you might be surprised by how much you can receive from this program. 

Contact the Experienced Tax Attorneys at Dayes Law Firm 

For the latest strategies to help you claim maximum Employee Retention Tax Credit funds, contact Dayes Law Firm at (800) 503-2000! We can offer a free, no-obligation consultation and discuss the unique needs of your business. We have helped hundreds of businesses file over $250 million in claims and look forward to helping you, too. Give us a call today to learn more!