Answers to Frequently Asked ERTC Questions

Date: February 01, 2023

NFIB’s Small Business Legal Center continues to answer questions on the ERTC

The Employee Retention Tax Credit (ERTC), also called the ERC, continues to be one of the NFIB Small Business Legal Center’s most frequently asked about topics. The ERTC expired in 2021, but there is still time for employers to retroactively claim this tax credit for qualifying wages paid to employees.

What is the ERTC?

The ERTC is a direct dollar-for-dollar reduction against the federal employment taxes that employers pay and report on a quarterly basis in their Employer Federal Tax Return (Form 941). A business can claim the credit on qualifying wages paid to employees for any quarter between March 13, 2020 – Sept. 30, 2021.

How do I know if my business qualifies?

There are two general ways a business can qualify for the ERTC:

  1. The business experienced a decline in gross receipts (at least 50% decline for 2020 quarter; at least 20% decline for 2021 quarter) compared to the same quarter in 2019; or
  2. The business experienced a full or partial suspension of business operations due to a government order. This provision also extends to suppliers of a business. If a business can prove its operations were impacted because of the inability to obtain goods or materials from its suppliers, it may qualify for ERTC.
How do I apply?

Employers can retroactively claim the ERTC by filing Form 941-X. The deadline to file Form 941-X is three years after the return the business is amending (see instructions for Form 941-X on page 6).

The Legal Center also encourages small business owners to use a CPA for claiming the credit. A lot of third-party companies offer their assistance, but small business owners should be wary of their legitimacy. If a small business owner has a CPA they trust and their CPA needs extra guidance, NFIB has webinars and resources that can be provided.

Has the ERTC been reinstated through the fourth quarter of 2021?

NFIB continues to urge Congress to reinstate the ERTC for 2021’s fourth quarter. The ERTC was originally set to expire on January 1, 2022, giving employers the ability to claim it for all four quarters of 2021. Since the ERTC offered savings of $7,000 per employee per quarter in 2021, this meant employers were eligible for up to $28,000 per employee in tax credits last year.

However, on November 15, 2021, the federal Infrastructure Investment and Jobs Act (IIJA) was signed into law. This bipartisan physical infrastructure law includes a provision changing the ERTC’s timeframe to only apply for the first three quarters of 2021, and not the fourth quarter.

Last year, legislation called the Employee Retention Tax Credit Reinstatement Act was introduced in both the U.S. House and Senate to restore the original timeframe for the ERTC. NFIB joined a coalition letter to leaders in Congress, urging that they pass the Act.

Who can I ask if I have additional questions?

NFIB’s Legal Center is a resource for small business owners nationwide. Along with advocating on behalf of small businesses in state and federal courts, the Legal Center is here to provide important and straightforward information that small business owners need to know. Reach out to the Legal Center with additional questions or for more information.

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