Introduction
The Employee Retention Credit (ERC) was a provision laid down in the CARES Act through the IRS which intended to allow businesses to recoup some of the funds that they’d paid out in wages to employees throughout the course of the pandemic. The ERC aims to reward businesses for keeping their employees in employment, even if the restrictions and lockdowns imposed due to the pandemic meant that they weren’t able to work full time hours.
Now that the pandemic restrictions have all been lifted, there are questions being raised about when the ERC will expire.
We’re about to look into the deadlines for applying, debunk common myths that may make ERC seem unattainable to some businesses and understand the clear expiration dates to avoid you missing out on this valuable opportunity for a refund.
Confusion Around the Employee Retention Credit Deadline
The changing nature of the ERC process has led to lots of confusion regarding expiration dates. This is because the Employee Retention Credit was initially intended to cover a portion of the wages paid out per employee for the time that they weren’t able to work due to lockdowns and restrictions. This rewarded the employer for paying their staff regardless of the hours they were meant to work and kept employees in the workplace, meaning the job market wasn’t drastically affected.
However, this measure was originally supposed to be short term, as the first lockdown was lifted and we thought the worst was over. But a second lockdown and stricter restrictions soon followed due to the increase in cases. This meant that the scheme, along with the Consolidated Appropriations Act, 2021 and the American Rescue Plan, 2021 was extended. These changes came with new deadlines that needed to be applied, which caused some confusion across the country among business owners.
To complicate things further, the rules and regulations for ERC and the criteria to receive the refund have also changed multiple times throughout the period to accommodate the changing rules and restrictions of the pandemic. The dates for filing your tax return are also different from the ERC claim. While the ERC ended in December 2021, you might not be able to wait until the next year to claim alongside your tax return.
When Is the Real Deadline to Apply for Employee Retention Credit?
Depending on your specific business situation, the deadline to apply for ERC may differ. Typically, the deadline to amend your payroll tax returns and apply for ERC simultaneously is 3 years from your original payroll return or 2 years from the tax payment deadline. Depending on how and when you last filed your tax and sent your payment, your ERC expiry date could be hugely different from a business in a similar situation.
To understand how this works in more detail and to ensure you don’t miss the deadline, it’s important that you consult a tax professional for assistance and support.
ERC Deadline For 2020 Tax Year
The CARES Act in March 2020 was the first introduction of Employee Retention Credit. It was initially intended to provide a refund for qualified wages paid any time after March 12, 2020 right up until January 1, 2021.
Because of the 3-year amendment procedures, you can technically claim this up until 2023, and the deadline for 2023 filing is April 15, 2024. However, this deadline may change based on how you filed in the first place and how and when you last paid your tax.
For some businesses, based on how they last filed, we’re very quickly approaching the deadline date for application. So, if you haven’t applied for ERC yet, you should do so as soon as possible.
ERC Deadline For 2021 Tax Year
To make the situation even more complex, for wages paid between January 1, 2021 and September 31, 2021, this same 3 year window could allow businesses to claim ERC right until April 15, 2025, depending on their situation.
These deadlines will vary based on your own business circumstances, so it’s important to consult a tax professional to make sure you don’t miss a deadline that’s specific to your own situation.
Myths About The Employee Retention Tax Credit Expiry
Because of the complexities of applying, some businesses may be put off when ERC is mentioned. But if you know what to look out for, the credit really is worth the time.
We Didn’t Struggle During The Pandemic, So We Won’t Qualify
The myth here is that a business needs to be on its knees to qualify. While this is a sad truth for many businesses throughout the pandemic, who were forced to close or to drastically reduce the hours to accommodate, other businesses were able to function online and still make a decent amount of money.
Your business doesn’t need to be facing closure to claim. You will just need to provide supporting evidence to show that your business had a decline in gross profit of at least 50% in 2020 and 20% in 2021. Or be able to substantiate a nominal impact on your day-to-day operations based on a government order or shutdown required due to state, local or federal mandates.
Our Business Didn’t Have To Close During The Pandemic, So We Won’t Qualify
Your business didn’t have to be fully closed because of the restrictions. If you were forced to reduce your opening hours, yet still pay your employees, then you may still qualify for ERC, as the pandemic has still had an effect on your business.
I Missed The ERC Credit And Now It’s Too Late To Apply
There’s a 3-year window to amend your payroll tax returns after the filing date. This means that, depending on when your business filed last, you may even have until 2025 to claim your credit.
However, it’s always best to file as early as possible to make sure you get the full refund that your business is entitled to.
There’s Still Time to Claim ERC
If you haven’t claimed your ERC yet, don’t worry, there’s still time. Contact a tax professional today and they can help you understand how much ERC your business qualifies for. They can also help you to create your claim and make the most of your refund.
What You Need To Do So You Don’t Miss The ERC Deadline
Be proactive. Don’t miss your deadline due to procrastination. Gather up your payroll reports and financial statements. If they show a significant decline in funds throughout 2020 and 2021, then you could be eligible.
The next step is to speak to an ERC Benefits advisor to help you file your claim for Employee Retention Credit as soon as possible. Mistakes could cost you money, so it’s important to involve someone that’s confident in the process.
You should also stay up to date with any changes throughout the process. The ERC has been amended multiple times since its inception and this may continue, so stay on top of the facts and bust the myths surrounding your claim.
How To Avoid Delays In Getting Your ERC Refund
If you’ve overlooked the ERC tax credit until now, we would recommend that you start to look into this right now. The refund that is available to companies that are eligible and qualify can be significant. Businesses can claim up to $26,000 per employee.
If you would like to discover if your business qualifies, fill out our eligibility form on our “Get Started” page. You will know instantly if you qualify and from there, we can help you right through the process. Our advisors will help avoid delays and we will be able to maximize your refund credit by ensuring you don’t miss anything.
We have helped hundreds of businesses maximize their refund return and are available to help you right now. Filling out the form is the first step, or call us today at: (561) 680 4677
Conclusion
The Employee Retention Credit is a complex concept and many people have been confused with the ever-changing rules and guidelines. The expiry date has also changed on multiple occasions, making it even more difficult to understand.
The truth is, your deadline could theoretically be different from other people’s. This is down to when you initially filed and paid your taxes. To ensure you get the most out of Employee Retention Credit and claim on time, it’s important to stay up to date with the changing news and speak to a tax professional to help you along the way.
There’s still time to claim ERC if you initially missed out, but you need to do so now to avoid missing out on the deadline and this amazing opportunity for your business.
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