Tax Credit Retention for Employees in Milwaukee, WI
As part of the CARES ACT, our Congress enacted several different legislations to help businesses in dealing with the financial strain caused by the recent covid-19 pandemic. From the CARES ACT, we benefited, as did companies, from something known as Employee Retention Tax Credits (ERTC).
An employer that kept their personnel in 2020 and 2021 has an eligible business for the Employee Retention Tax Credit. It’s a benefit designed to compensate any eligible employer, meaning those that kept their employees despite losses in revenue and business problems. We at Miller & Miller Law, LLC can help you find out if your business qualifies for the Wisconsin Employee Retention Tax Credit.
Our attorneys have the knowledge and experience to help you with your Employee Retention Tax Credit requirements. We can handle anything from employer qualifications to credit calculations and preparation of forms. If you have any concerns about a Wisconsin Employee Retention Tax Credit, contact us to schedule a free case evaluation.
What is ERTC and What Benefits Can Your Business Get from It?
In this video, Attorney James Miller discussed the Employee Retention Tax Credits and the importance of businesses knowing how much they can benefit from ERTC. Contact Attorney James Miler to talk about your specific business situation, to get an estimate on your ERTC refund check as well as how long it will take to get it.
Employee Retention Tax Credit: A Brief History and Definition
The March 2020 Coronavirus Aid, Relief, and Economic Security Act (CARES Act) (P.L. 116-136) includes an employee retention tax credit intended to assist businesses in retaining employees amid the public health emergency known as Coronavirus Disease 2019 (COVID-19). The credit was updated and enlarged in December 2020 as part of the COVID-related Tax Relief Act of 2020 (enacted as Subtitle B to Title II of Division N of the Consolidated Appropriations Act, 2021; P.L. 116-260).
Historically, employee retention credits have been used as a policy instrument to give disaster tax relief. The objective has been to lower the cost to employers of retaining employees on their payrolls throughout the disaster recovery period. As a legislative response to the COVID-19 epidemic, which has created prolonged labor market disruptions, an employee retention tax credit (ERTC) was implemented.
The Old Employee Retention Credit of 2020
The former employee retention credit ran from March 13, 2020, to December 31, 2020. It was offered to any private enterprises (including NGOs) that faced financial difficulties in 2020 as a result of the Coronavirus (COVID-19) pandemic. This encompasses any type of business:
- Whose activities were completely or partially halted during any calendar quarter in 2020 as a result of a government COVID-19-related order, or
- That saw a 50% or more drop in gross revenues during any 2020 calendar quarter as compared to the same quarter in 2019–the drop does not have to be related to the pandemic.
The old employee retention tax credit is equivalent to 50% of qualifying wages provided to full-time employees for all eligible calendar quarters starting March 13, 2020, and ending December 31, 2020. An eligible calendar quarter is one during which the employer faces economic difficulty as indicated above. The cost of employer-provided health care is included in qualified earnings. The maximum credit per employee per quarter is $5,000. Therefore, the maximum credit available in 2020 is $20,000 for each employee.
For example, ABC, Inc. paid Brian $8,000 in salary in the first quarter of 2020; $10,000 during the second quarter; $12,000 during the third quarter; and $14,000 during the fourth quarter. ABC is eligible for a $4,000 employee retention credit for the second quarter (50% of $8,000), and a $5,000 credit for the 2nd, 3rd, and 4th quarters. Brian will get a total credit of $20,000 from ABC in 2020.
The New Employee Retention Credit of 2021
Businesses and nonprofits could take advantage of the new employee retention credit beginning January 1, 2021, if they meet the following criteria:
- wholly or partly suspend operations in 2021 as a result of a government order restricting trade, travel, or group gatherings (for commercial, religious,
- social, or other reasons) as a result of COVID-19, or
- when gross revenues fall by 20% or more in a calendar quarter in 2021 compared to the same period in 2019.
The new credit is equivalent to 70% of each employee’s wages, including health benefits, paid during a qualifying quarter in 2021. The maximum credit for each employee every quarter is $7,000. Therefore, the maximum credit in 2021 per employee is $28,000. For example, ABC, Inc. paid Brian $10,000 in wages for both the 1st and 2nd quarters of 2020. ABC is eligible for a $14,000 employee retention credit (70% of Brian’s salary).
Recovery Startup Businesses
What if your business was established after 2019? It is not eligible for the regular employee retention credit. However, “recovery startup businesses” qualify for a special employee retention credit. These are the businesses that:
- started after February 15, 2020,
- make no more than $1 million in gross revenue per year.
- did not stop or slow down operations because of COVID-19, and
- didn’t have gross revenues that were 20% lower than in the same calendar quarter in 2019 as well as 2020.
After applying the $10,000 pay cap per employee, a recovery startup business can claim a 2021 employee retention credit of up to $50,000 each quarter.
How Much is Your Business Getting Under the ERTC?
It all depends. Miller & Miller Law, LLC can help you with the complex computation, but it can be worth up to $26,000 per W2 employee. The money from the ERTC is not a loan, and it does not need to be repaid. So, when you submitted your 941s for tax years 2020 and 2021, you included your employees to claim or get the ERTCs. To acquire the ERTCs, we’ll need to submit updated 941s for 2020 and 2021. There are no stipulations on how a business may utilize the ERTCs, therefore this will be a tax credit and a direct payment from the IRS. Therefore, you will be getting a check from the Internal Revenue Service.
Remember that this is taxable income, and the amount of money or refund you will get from the government for the ERTC will be determined by the number of workers you have. You could have one employee, a hundred employees, or even 500 employees in 2021. So, regardless of how large or small your business is, contact Miller & Miller, LLC and we will gladly provide you with as much information as we can about your business or application for ERTC.
How Do You Qualify for Employee Retention Tax Credit?
You may be qualified for ERTC if you show either a requisite drop in gross income or a greater-than-nominal impact due to government orders and restrictions. You may also be eligible for ERTC and Paycheck Protection Program (PPP) funds. So if you get a government payroll protection check, you will also be eligible for the ERTC. Keep in mind that there has been a lot of confusion over who qualifies for the ERTCs.
Did You Have the Requisite Drop in Income?
Many businesses did not. However, it is “or if you had a greater than nominal impact.” You would be qualified for an ERTC if:
- you experienced a partial or total shutdown due to government mandates,
- if you had to limit the number of people in a room or building,
- if you were unable to attend normal networking events and functions such as professional conferences,
- you had disruptions in the ability of the salesforce to function normally,
- supply chain disruptions harmed your business,
- you were unable to get access to the equipment,
- you had limited operating abilities,
- you were unable to work with suppliers,
- there was a reduction in the services and products available to clients,
- you were forced to reduce your operating hours,
- you had to change your hours to clean and sanitize your facility more,
- you experienced project cancellations or delays as a result of covid-related issues,
- and due to a disruption in the supply chain, you had to delay the manufacturing schedule.
So there are numerous reasons why there may be a greater than nominal impact. So, although you may not have had a drop in revenue, you may have had a nominal impact on your business. Call us now, and we will conduct a free evaluation for you to see whether you qualify for ERTC. Our tax law firm works with us, and we will do a detailed analysis of your case to determine the amount of credit you will be granted. Whether you are a business owner, self-employed, have one employee, or have a hundred workers, we can work with you.
If My Business Made Money During the Pandemic, Can I Still Qualify?
Yes, remember there are 2 ways you can qualify for the ERTC:
- a drop in income, and
- a nominal impact tax.
Can I Access the ERTC if I Received a Paycheck Protection Program (PPP) Loan Forgiveness?
Yes, you can, and that can be discussed more once you get the chance to speak with a tax lawyer concerning your situation.
The Advantages of Employee Retention Credit Versus PPP Loans
For many businesses, the ERTC can be as good as or better than a PPP loan forgiveness, and it is much easier to obtain. Furthermore, Congress created a new expanded retention credit that will be in effect until December 31, 2021. In contrast, the PPP loan forgiveness program expires on May 31, 2021.
Originally, you couldn’t get both a PPP loan and employee retention credit, so many businesses avoided it. However, Congress amended this rule. Both a PPP loan and an employee retention credit may be obtained retroactively back to 2020. However, employee wages used to secure PPP loan forgiveness cannot be used to calculate the employee retention credit amount.
What if My CPA Tells Me I’m Not Eligible for the ERTC?
CPAs often inform clients that they do not qualify based on a study of the revenue reduction test. In general, CPAs have been less than enthusiastic in analyzing business under the nominal impact tax and have left analysis to tax attorneys to assess whether you qualify for the ERTC.
Is the ERTC for a Certain Industry Only?
No, and it is not designed to be limited to any one business, and it will be accessible to all businesses that have a W 2 employee during the pandemic. You do not have to have a particular number of employees, so if you are a small business owner with 100 workers in the tax year 2020 or 500 employees in the tax year 2021, there is a cap on the number of employees you may have to qualify, but there is no restriction on the minimum number of employees you must have to qualify for the ERTC.
You may not have heard of the ERTC because, when it was first introduced, it was assumed to be more restrictive than it is. The ERTC has evolved. Since the inception of the ERTS, several mandates and directives have been issued. Both President Trump and President Biden have expanded the nominal impact information, and it is now much more common for small businesses to take advantage of claiming what is legitimately theirs.
Are there Risks Involved in the ERTC Application?
At Miller & Miller, we have enlisted the help of our partners at our tax law firm to examine your case, and we will handle your ERTC application on a 20% contingency fee basis in collaboration with our tax partner. If we are unable to recover the ERTCs for you, you will not owe us anything for the expenses of pursuing the collection of your ERTCs. But the most important thing is that our price is 20%. It is a flat fee, but it also covers representation and a full defense at no extra charge, in the event that your ERTC claim is audited.
This is not to say you need to worry about getting audited. What we are concerned about is that we do not know what the IRS will do in the future about audits linked to the ERTC. However, after you apply for and get the ERTC, the program that we have here at Miller & Miller will 100% ensure IRS guidance and a full defense of any ERTC audit at no extra cost.
Contact Our Tax Liability Representation Lawyers Today
Contact Miller & Miller Law, LLC, today to schedule a free case evaluation to explore whether you qualify for Employee Retention Tax Credits. Our law firm can also help you with legal issues concerning Bankruptcy, Taxes (unfiled or unpaid tax issues), and Student Loans.
Good legal advice shouldn’t ever be out of reach. Everyone in our state is important to us. We help people all around Wisconsin, not just in Milwaukee. Let’s have a talk about the circumstance you’re in. We can help you figure out what to do.