Employee Retention Tax Credit (ERC) Case Study
What is the
Employee Retention Credit?
The Employee Retention Credit (commonly referred to as the ERC) is a payroll tax credit employers may claim to assist with recovery from the pandemic and employee retention. Recipients could recoup this tax credit as an advanceable cash refund. They may also apply it to their taxes, reducing current and future payroll taxes. The program was created by The CARES Act in March 2020 and expanded by the American Rescue Plan Act to increase eligibility significantly for employers. Employers could claim an Employee Retention Credit (ERC) of up to $26,000 per employee over 2020 and 2021.
Who Can Claim Employee Retention Credit
If your organization experienced a significant decline in gross receipts (at least 20%).
If your operations were impacted during any calendar quarter from 2020 to the third quarter of 2021, you may be eligible for an ERC over $1 million.
Determine Your ERC Eligibility
MP’s ERC experts created this simple decision tree to help you determine your ERC eligibility.
How Does MP Help You Claim Your Maximum ERC?
MP will assist your team in collecting payroll data, gross receipts, proof of partial or full suspension, payroll information, and any relevant PPP funds data. We’ll provide an estimate for your maximum ERC and timing to obtain it.
Our experts will accelerate realization of ERC funds. We’ll work with you and your payroll team and provider to quickly gather necessary data.
Analysis and Documentation
Our team will create a thorough ERC tax study of your claim. This process includes:
- Computations for qualification in 2020 and 2021
- Data for your qualified wages for credit
- Your use of PPP loans and how they affect your ERC claim
- Technical documentation of your eligibility for the ERC
- Responses to any of your unique complications and calculation of your ERC
Why Work with MP’s ERC Services
Tax Saving Scenarios
Learn more in our step-by-step guide
The Employee Retention Credit (ERC) Playbook
Maximize Credit. Minimize Disruption.
Employee Retention Tax Credit FAQ
What is the ERC?
The Employee Retention Tax Credit is a refundable, advanceable tax credit program. Eligible recipients may be in anticipation of receiving funds of $1 million or more. They may also apply their funds to reduce future employee payroll taxes.
How do employers claim an ERC?
The ERC is an IRS-run program. Employers should work with specialists, such as MP, to develop their claims. Claims are based on employee wages paid during 2020 and 2021 quarters when the employer is eligible.
Does the employee retention credit have to be paid back?
No. This program offers employers funds, not loans.
How is the ERC calculated?
The ERC is calculated based on a few factors: an employers’ decline in gross receipts and the amount of employees they’ve paid wages for in any quarter of 2020 or the first three quarters of 2021.
Who is eligible for the ERC?
Employers of all sizes (from small business to large corporation) and across all industries are eligible to claim an ERC. (Nonprofits are also eligible.) Eligibility is determined by whether an employer had a significant decline in gross receipts or if pandemic government orders impacted its business operations.
Have other tax needs?
MP is wired to help our clients save thousands in employment taxes every year. Our experts will help you complete your quarterly federal tax return, identify the latest tax incentives, and streamline your claim process.