Many companies experienced lost revenue to the COVID-19 pandemic but chose to keep employees on the payroll. To compensate small and medium-sized businesses, the government offered employee retention credit to help them stay afloat. Did you miss the window to receive your reimbursement? Read on to find out.
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Employee Retention Credit Explained
When the COVID-19 pandemic hit the United States in force, many state governments shut down businesses to keep people safe. Employers were left wondering what to do with employees.
Many good-natured souls kept staff on the payroll to help people make ends meet and in hopes the shutdown would come to a quick end. In some cases, companies still dealt with issues well into 2021.
The government created employee retention credit (ERC) as a way for small and medium businesses to recover payroll costs during slow times. Business owners could request credit from 2020 until the fall of the following year.
What Are the Eligibility Requirements for ERC?
To qualify for employee retention credit, your business must have experienced at least one of the following:
- Your business was completely or partially closed from a government order in your state. This order must have come as a result of the COVID-19 pandemic.
- Your business faced a certain decline in gross receipts
.The government’s rules surrounding “a decline in gross receipts” varied between 2020 and 2021.
Businesses in 2020 must have seen at least a 50% drop in gross receipts when compared to the same interval in 2019. Only companies with 100 full-time staff or less are able to apply.
In 2021, businesses only needed a 20% decrease in gross receipts to qualify. The government also allowed organizations of up to 500 full-time employees to take part.
What is the Deadline for the Employee Retention Credit?
The employee retention credit program may be at an end, but it’s not too late for your business to submit a request for funds. However, there are two deadlines you’ll need to watch out for.
Any amendments to your 2020 filing must be completed no later than April 15, 2024. Similarly, changes to your 2021 payroll tax forms must be submitted by April 15, 2025 at the latest.
How to Apply for Employee Retention Credit
Employee retention credit comes from your payroll taxes, which you’ve already submitted for 2020 and 2021. To claim a reimbursement of funds owed as a result of this program, you’ll need to file an amendment to those payroll forms.
The IRS uses Form 941-X specifically for this purpose. You’ll have to file one form for each quarter you’re requesting funds from.
You can get away with just one form for 2020, but you’ll need to submit a unique Form 941-X for each of the first three quarters of 2021, assuming you qualify.
Bottom Line on What is the Deadline for the Employee Retention Credit
Although the employee retention credit program has come and gone, it’s not too late for your business to file for a refund. Submitting your application requires careful completion of Form 941-X for each quarter you’re requesting credit from. The IRS handles these forms as they can, but many businesses are waiting between six months and a year for their check.
If you want to speed up the process, using an ERC filing service may be your best bet. Companies like Bottomline Concepts will help you navigate the complicated process and get your form in front of the IRS that much faster. Such a service also minimizes your chances for errors that can lead to delays or no payment at all.