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Debunking Myths About the Employee Retention Credit (ERC): Insights from The Jones Law Firm

November 03, 20232 min read

Since its inception in March 2020 under the CARES Act, the Employee Retention Credit (ERC) has been a source of financial relief for businesses, offering refundable employment tax credits as a support measure through the pandemic. With several amendments and updates to the ERC, a cloud of confusion has surrounded it, leading to a multitude of myths and misconceptions.

At The Jones Law Firm, we strive to demystify these misconceptions and guide businesses towards a clear understanding of the ERC. For more in-depth information and Frequently Asked Questions, visit here.

Myth #1: Receiving a PPP Loan Disqualifies My Business

Initially, businesses that received a Paycheck Protection Program (PPP) loan were deemed ineligible for the ERC. However, the Relief Act of December 2020 retroactively amended this, allowing businesses to claim the ERC on qualified wages that aren’t used for PPP loan forgiveness.

Myth #2: It’s Too Late to Claim the Credit

Contrary to this belief, businesses can still file for a retroactive ERTC refund even after recovering from a significant decline in gross receipts. The eligibility window spans three years after the program ends, giving businesses ample time to assess wages paid after March 12, 2020.

Myth #3: Businesses Established in 2019 Aren’t Eligible

New businesses from 2019 can indeed qualify! The quarter in which the business was started serves as the baseline for assessing quarterly decline until the business completes a year of operations.

Myth #4: Insignificant Revenue Decline in 2021 Means No Qualification

Several rule modifications by the IRS, including an alternative quarter election and specific safe harbors, have made it easier for businesses to meet the eligibility criteria, even with minimal revenue decline.

In addition to debunking myths, it’s crucial for businesses to consult with a knowledgeable advisor. Many businesses prematurely conclude they’re ineligible for the ERC, missing out on financial opportunities. The Jones Law Firm, with its dedicated tax team, has successfully assisted numerous businesses in realizing their eligibility and optimizing the benefits of the ERC.

Understanding ERC Rules for Small Employers

  • 2020 ERC vs. 2021 ERC: The number of credits, definitions, applicability, and eligibility criteria have varied between 2020 and 2021, with notable differences in credit amounts and the assessment of revenue decline or operational shutdowns due to COVID-19.

For further clarity and to explore the possibility of qualifying for the Employee Retention Credit, connect with an advisor at The Jones Law Firm. We specialize in helping diverse sectors, including manufacturers, restaurants, non-profits, schools, construction companies, and more, in claiming their rightful ERC and receiving substantial cash refunds.

Remember, if your business experienced disruptions due to COVID-19 mandates at any government level, it’s worth exploring your eligibility for the Employee Retention Credit. Don’t let myths and misconceptions hinder your financial opportunities. Connect with us here for more details and FAQs.

The Jones Law Firm, PC. is a law firm that primarily focuses on various mass-tort cases and personal injury. Chad Jones is the founder.

Chad Jones

The Jones Law Firm, PC. is a law firm that primarily focuses on various mass-tort cases and personal injury. Chad Jones is the founder.

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