The Employee Retention Tax Credit is a refundable tax credit in which Employers can receive a tax credit against federal employment taxes via qualified wages paid to their employees from March 13, 2020, to December 31, 2021.

The Employee Retention Credit is available to both small and mid-sized businesses. It was signed into law on March 27, 2020, as part of the CARES Act. The bill was significantly expanded in 2021.

Misconceptions and incomplete assessment

There are many misconceptions about the credit, who qualifies, and what the different qualification methods are.

• If you did not claim the credit, it can still be amended for. Businesses can retroactively claim the credit against past quarters.
• Businesses that receipt PPP loans or EIDL in 2020 or 2021 can still claim the ERC Credit
• The ERC is not a loan; it is a tax credit. This means that it does not have to be repaid, or used in any specific way

To claim the credit in any quarter the Business must either meet a Gross Receipts or Business Disruption Test. Many practitioners, consultants, and accounting staff do not fully understand how each test can be applied in the whole or partially. Even if you were told you do not qualify the potential savings are too large not to have an expert at Gulati Consulting conduct a free analysis to confirm if you qualify or not. See examples below: