Top 10 Things Tax Professionals Need to Know About the Employee Retention Credit — Raistone

Summary

A Raistone guide titled Top 10 Things Tax Professionals Need to Know About the Employee Retention Credit, dated November 2023 in its title. It describes the ERC as a refundable tax credit of up to $26,000 per employee, equal to 50% of qualified wages in 2020 and 70% per calendar quarter in 2021, created under the CARES Act. It states that the current wait time for Raistone clients is averaging six months, that the time to apply for the 2020 ERC closes on April 15, 2024, and that the 2021 deadline is April 15, 2025. It says working with a third-party partner like Raistone lets a client receive a refund in as little as two weeks and that tax preparers can earn referral fees. It also says the IRS ordered a stop to new ERC processing through the end of 2023 or longer.

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“Top 10 Things Tax Professionals Need to Know About the Employee Retention Credit — Raistone.” Original at raistone.com. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/raistone-capital-the-complete-guide-to-erc-nov-2023-6394724ef8/, SHA-256 17338e8a54872ab30c411764f6e9790681a2188ddb10eaf0e4d03d6b80fb9a44.

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TOP 10 THINGS TAX PROFESSIONALS
NEED TO KNOW ABOUT THE
EMPLOYEE RETENTION CREDIT
The Employee Retention Credit (ERC) is one of the most
important recent tax credits available to businesses as
they continue to recover from the effects of COVID-19.
The Employee Retention Credit (ERC)

The Employee Retention Credit (ERC) is one of the most important recent tax credits

available to businesses as they continue to recover from the effects of COVID-19. With up

to $26,000 in credits per employee, it can provide a significant bottom line boost for many

companies.

While nearly 70% of companies may qualify for the ERC refund, there are certain guidelines

and restrictions that must be met in order to qualify for this credit. In this blog post, we will

discuss the top 10 things tax professionals need to know about the ERC refund for their

clients. We’ll cover eligibility criteria, available funds, payment processing times, potential

third-party partner program details, and more – all designed to help you provide your

clients with the best possible service. Let’s get started.

1. What is an ERC?
The Employee Retention Credit

(ERC) is a refundable tax credit of
up to $26,000 per employee against

certain employment taxes equal

to 50% of the qualified wages paid

to employees in 2020, and 70% per

calendar quarter in 2021. It was

created as part of the CARES Act in

2020 to provide businesses with
financial relief from the severe economic effects of the Covid-19 pandemic. The ERC applies

to companies that remained in business and retained employees during Q1-Q4 of 2020,

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2. Criteria for companies qualify for an ERC refund
The ERC refund is intended for businesses that experienced disruption due to the spread of

Covid-19. Whether it was a decrease in revenue, retaining employees, or staying in business, the

refund has been designed to help businesses offset those challenges. Businesses that experienced

disruptions to commerce, travel, or group meetings due to government orders limiting the

spread of Covid-19 may be eligible for an ERC refund. These can include reduced hours, price

increases, reduction in goods or services offered, inability to travel, meeting employee count limits

(averaging less than 500 full-time employees), and having paid qualified wages after March 12th,

2020. According to research conducted by the National Federation of Independent Businesses,

less than approximately 36% of small business owners said they had some level of familiarity with

ERC refund. For more information about whether your clients are eligible for the ERC refund, it’s

recommended to review the IRS website.

3. How much money can your clients receive for their
ERC refunds?
The amount of funds available for ERC refunds depends on several factors, such as the number

of employees, how long they worked during 2020 and 2021, and how much they were paid. Given

its complexity, determining the exact refund amount often requires tax professionals like you.

However, in general, companies can receive up to $26,000 per employee in credits against their

employment taxes. Smaller businesses with 100 or fewer employees can claim credits up to $5,000

per employee for wages paid between March 12th, 2020 and December 31st, 2020 and up to $7,000

per employee per quarter in 2021.

4. Helping your clients apply
for an ERC refund
Tax professionals help clients apply for the ERC

refund on the appropriate tax form for your

client, including Adjusted Employer’s Quarterly

Federal Tax Return. Additionally, companies

may use an online ERC calculator to help

determine their eligibility and estimate the

amount of credit they are due.

© Raistone 2
5. How long your clients can expect to wait to receive their
ERC refund
Processing times vary, but the current wait time for Raistone clients is averaging six months.

6. Your clients can still apply for their ERC refund
Businesses may still apply for an ERC refund. The time to apply for the 2020 ERC closes on April

15, 2024, and the statute of limitations for the 2021 ERC closes on April 15, 2025. However, it is

recommended to apply now instead of waiting, particularly given the number of companies that

are likely eligible, and keeping in mind that there is currently a wait time of approximately six

months for a refund.

7. Will my clients qualify for an ERC refund if they also
received a PPP loan?
According to the IRS, “The Taxpayer Certainty and Disaster Tax Relief Act of 2020, enacted

December 27, 2020, made a number of changes to the employee retention tax credits previously

made available under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).” With

these changes, the law “now allows employers who received Paycheck Protection Program

(PPP) loans to claim the ERC for qualified wages that are not treated as payroll costs in obtaining

forgiveness of the PPP loan.”

8. Help your clients receive
their refund sooner with a
third-party partner
Many companies are using third-party partners

to assist in filing their ERC refunds. As tax

preparation professionals, you can offer them this

service as well. Once the claim is filed, partnering

with a third-party service provider, like Raistone,

benefits both tax preparers and their clients. It

allows your client to receive their ERC refund in
as little as two weeks, compared to the six-month wait time it would take with the IRS. Raistone offers tax

preparers a benefit as well — tax preparers can make additional income through referral fees

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9. The IRS temporarily paused Employee Retention Credit
processing
The IRS recently ordered a stop to new Employee Retention Credit processing through the

end of 2023 — or longer — due to a surge of questionable claims. We rely on referrals from tax

professionals who determine their clients legitimately meet the criteria for the credit, guide clients

through the complex tax reporting, and help determine their clients will benefit from accelerating

their refund.

Raistone relies on a tax professional’s first obligation which remains accuracy and advocacy for the

client. The tax preparer’s referral fee is a portion of what is deducted from the advanced proceeds

from our client and they are required to disclose that to their client.

10. What if my client already has an ERC refund pending
If your client has already applied for an ERC refund and is awaiting approval, they can take

advantage of third-party services to access their pending funds sooner.

Get Started Helping Your Clients Advance Their ERC Refund

The Employee Retention Credit (ERC)
is a great way for employers to get
financial relief from the effects of
COVID-19. However, it’s important to
understand the details of how it works,
including eligibility requirements and
processing times. Partnering with a
third-party service provider can make
the process easier and faster, so your
clients can get their ERC refund sooner.
With the right partner, businesses
can receive their ERC refund in as
little as two weeks rather than waiting
months for approval. If you have clients
considering applying for an ERC,
contact Raistone to learn more about
our services. We’ll help you maximize your client’s benefit from this valuable program.
Many of our tax preparation partners have found this to be a significant service offering for
© Raistone 4
their clients, one that can help improve client satisfaction and increase loyalty.
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