ERC Eligibility & Requirements

If your business managed to retain its workforce throughout the COVID-19 pandemic, you may be eligible for a substantial refund on payroll taxes from the IRS - even if you received a PPP loan. This refund is available through the Employee Retention Credit (ERC) program. To discover if you're eligible, and what the specific requirements are - read on.

Home ERC Eligibility and Requirements

ERC Requirements

To be eligible for the Employee Retention Credit, you must meet these 2 base requirements:

  • Your business is based in the United States
  • You had up to 500 employees

AND 1 of the following requirements:

  • Experienced a Decline in Gross Receipts

Experienced a significant decline in gross receipts. Specifically, your business must have endured a quarter in 2021 (be it Q1, Q2, or Q3) where the total gross receipts were less than 80% compared to the gross receipts of the corresponding quarter in 2019. This 20% reduction in gross receipts serves as a benchmark to identify businesses that have faced substantial financial hardship due to the pandemic.

  • Suspension of Operations

Experienced a full or partial suspension of operations. This condition is met if, during a calendar quarter, a governmental order limiting commerce, travel, or group meetings was imposed due to COVID-19, and this order impacted the normal functioning of your trade or business.

  • Qualified as a Recovery Startup Business

If you commenced your trade or business on or after February 15th, 2020, and your annual gross receipts do not exceed $1 million, you are considered to be a "Recovery Startup Business." This qualification allows you to claim the Employee Retention Credit, even if you did not meet the other requirements of decline in gross receipts or suspension of operations due to government orders.

Wages paid in Q3 and Q4 of 2021 are eligible for ERC funding up to $50,000 per quarter as a Recovery Startup Business.

ERC Eligibility Defined By Industry

There are numerous businesses that meet the eligibility requirements for the ERC. Several industries, such as those mentioned below, qualify for ERC eligibility:

  • Industrial/Manufacturing
  • Not-for-profit Organizations
  • Retail
  • Technology
  • Construction
  • Restaurants
  • Hospitality
  • Education

If you’re still uncertain as to whether or not businesses in your industry are eligible, please get in touch with a member of our team - we're always happy to help.

ERC Eligibility by Industry

How Long Does It Take to Get My Refund?

Per recent IRS changes, claims received before 9/14/2023 have a processing time of 180 days. Claim applications received after 9/14/2023 will be held until the beginning of 2024 before they are reviewed and processed. Wait times could increase later on as the deadline to apply draws closer. We recommend submitting your ERC application as soon as possible to receive your refund in the timeliest manner.

ERC Eligibility FAQs

Do Non-Profits Qualify for the Employee Retention Credit?

Non-profits can qualify for ERC if they paid W2 employees during the eligible periods and meet other qualifying criteria. Tax-exempt organizations often still incur payroll taxes, and as such their employee wages are eligible to be reimbursed through the ERC program.

Are Churches Eligible for ERC?

Just like other non-profits, churches can qualify for ERC if they paid W2 employees during the eligible periods and meet other qualifying criteria. Tax-exempt organizations often still incur payroll taxes, and as such their employee wages are eligible to be reimbursed through the ERC program.

Does ERC only reimburse business owners for full-time employee wages?

No. While the number of full-time employees is used to evaluate the size of a business for ERC purposes, other full-time equivalent employees or part-time employee wages can still be recovered through ERC if they were paid as W2 employees. Full-time employee count is important when deciding if a business is eligible for the program. If your business had fewer than 100 full-time employees in 2019, you are eligible for ERC funds if you qualify. If your business had more than 100 and fewer than 500 full-time employees in 2019, you are eligible for ERC funds for 2021 only. Organizations with more than 500 full-time employees in 2019 are not eligible for the ERC program.

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