Has the employee retention credit expired?

Cassidy Jakovickas, certified public accountant, is president and CEO of MBS Accountancy Corp. Businesses that wish to apply for the ERTC must declare the total of their qualified salaries paid, as well as the costs related to health insurance, on their quarterly tax returns (Form 941 for most employers). While the rules for larger employers are similar to those for smaller employers, they have some exceptions. It focuses on identifying and maximizing federal, state and local tax credits that drive job creation, job training, capital investment, and new business development.

People with fewer than one hundred employees must follow different rules than those with more than five hundred employees. To receive the ERTC, companies must monetize the credit for each payroll period by filing a quarterly payroll tax return using Form 941. If the number of employees is below a certain threshold, the employee may be eligible for this credit. To file a retroactive return, you must file an adjusted quarterly federal tax return from the employer or a request for reimbursement, on Form 941-X. The IRS guidelines have included some rule changes that may make it easier for employers to meet the eligibility test for the employee retention credit.

Kim is a member of the employee benefits auditing and service teams for private companies and focuses on providing warranty and advisory services to these customer groups. The IRS established this tax credit to encourage employers to retain their current employees and pay them a higher salary. If your company recovered from a “substantial decline” in gross revenues, as indicated in the table above, and you haven't applied for credit before, you can still request a retroactive refund from the ERTC. Before you apply for the employee retention credit, you must pass the gross income test or the suspended operations test.

This credit is available to most employers, as long as they have made reasonable efforts to retain employees. However, if the qualifying employer has a high staff turnover, the credit may not be available for that quarter.