Tax Credits - Pinecrest

Employee Retention Credit (ERC): The Basics

The Employee Tax Credit (ERC) can be complex to navigate, and many mistakenly believe they are not eligible because they did not lose money or halt operations during the pandemic. In reality, the ERC is a tax credit designed to incentivize employee retention during COVID-19. Therefore, if you paid your employees during 2020 or 2021, you may be eligible to claim up to $26,000 per employee so long as you meet one of the criteria below.

ERC Eligibility

You only need to meet one of the criteria below to qualify for the credit.

You experienced a significant decline (20% or more) in gross receipts.

Many businesses initially — and mistakenly — assume they do not qualify for the ERC since they did not experience a decline in gross receipts. If this sounds like you, we encourage you to contact our team. You may still be eligible to receive the credit via the other two paths to eligibility.

Your operations were partially or fully suspended due to the pandemic.

This means you were required to modify your operations due to federal, state, or local mandates. Examples include, but are not limited to: altering your business operations due to social distancing guidelines, stay-at-home orders, and telework.

You are a Recovery Startup Business (RSB).

A RSB is a business that commenced operations after February 15th, 2020.

If your business was impacted by COVID-19, you could qualify for a credit of up to $26,000 per employee. Not sure if you qualify? Schedule your free ERC Consultation today.

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Paid Leave Credits (PLC)

During the pandemic, businesses were federally mandated to provide paid leave to employees who were out sick, caring for sick family members or dependents, or looking after their children whose childcare, camp, or school was closed due to the pandemic. Acknowledging the burden this places on small and midsized companies, the federal government allows businesses to file for a refund of up to 100% of paid leave payroll.

If your employees took sick or family leave during COVID-19, you may be able to recover up to 100% of the paid leave you provided.
Not sure if you qualify? Schedule your free Paid Sick and Family Leave Credit consultation today.

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Our Process

We gather the data

We collaborate with your team to determine your eligibility for the Employee Retention Credit (ERC), Paid Sick Leave Credit, and Paid Family Leave Credit.

We calculate your refund

We determine the correct claim amount, factoring in other loans and credits such as PPP.

We substantiate your claim

We collaborate with top law firms to provide you with a third-party opinion and a written substantiation memo.

We prepare your paperwork

Once we’ve determined your eligibility and calculated your credit, we provide you with an amended Form 941 for your submission.

You receive your refund

Submit the amended Form 941 and keep an eye out — your refund will arrive via check from the U.S. Treasury.

Frequently Asked Questions

Don't see your question listed?

Feel free to send us an email at admin@pinecrestconsulting.com, and a consultant will reach out to you shortly.

What is the ERC?

The ERC is a tax credit that was designed to incentivize employee retention during COVID-19. Therefore, if you paid your employees during 2020 or 2021*, and either your operations were limited due to the pandemic or you took a financial hit, you may be eligible to claim up to $26,000 per employee.

*Only Recovery Startup Businesses may claim a credit for Q4 2021*

Who is eligible for the ERC?

There are three ways to qualify; you only need to meet one of the following criteria:

1. You have sustained a partial suspension of your operation.

2. You have sustained a significant decline in gross receipts.

3. You are considered a Recovery Startup Business.

What is a "full or partial suspension of operations?”

You may be eligible for the ERC if you had to modify your operations due to local, state, or government mandates.

Examples include:

Maintaining social distancing.
Limiting hours.
Offering remote work.
Moving in-person meetings to videoconferencinclosing a customer service desk/workstation
Closing a customer service desk or workstations.
Offering delivery only.
Abiding by the eviction moratorium.
Providing outdoor-only dining.
Coping with pandemic-related supply issues.

How do we qualify limitations on business due to the pandemic?

Our research team will identify federal, state, and local mandates to help determine if you are eligible for ERC. Once we’ve determined your eligibility, we will provide a written substantiation memorandum detailing how said mandates limited your operations.

My revenue increased during the pandemic. Am I still eligible for the ERC?

You may be eligible if you had to modify your operation in a way that would be considered a partial suspension of operations (see above). Additionally, businesses classified as Recovery Start Businesses may qualify.

What is the definition of "significant decline in gross receipts?”

A significant decline in gross receipts is defined as a 20%* or more reduction in gross receipts as compared to the same quarter in 2019.

* For claims in the 2020 year, a significant decline is defined as 50% reduction.

What is a Recovery Startup Business (RSB)?

A Recovery Startup Business is a business that began carrying out any trade or business after February 15, 2020. There are also maximum income requirements; please feel free to reach out for more information.

The pandemic affected my vendors or clients; therefore, I was indirectly affected. Am I eligible for the ERC?

You may still be eligible. Please feel free to reach out for further clarification.

How can I trust Pinecrest to be impartial when determining my eligibility?

Pinecrest relies on independent legal counsel to verify eligibility. We work with a handful of the top law firms in the country, selected based on their experience with the Employee Retention Credit. You would be their client, so their fiduciary duty is to you and you only. They will also provide you with a written legal memorandum substantiating your claim.

I represent a nonprofit or a franchise. Can I claim the ERC?

Yes, nonprofits may claim the ERC as it is a payroll tax credit. Franchise owners who own their entity may claim the credit as well.

My business was deemed essential during the pandemic. Am I eligible to receive the ERC?

As long as you meet the eligibility requirements, you may claim the credit. Many essential businesses had to modify their operations or sustained a loss during the pandemic. (For more information, see the FAQ related to partial suspension of operations or decline in gross receipts.) Additionally, Recovery Startup Businesses that were essential may be eligible to claim the credit.

When does the credit expire?

For claims in the year 2020, the last day to file is Apr 15, 2024. For claims in the year 2021, the last day to file is Apr 15, 2025

How much money can I receive via the ERC?

Employers may be eligible to receive up to $26,000 per employee. However, multiple factors affect the credit amount. For that reason, we conservatively estimate $10,000 – $15,000 per employee. Some factors that affect your credit include: your employees’ wages, how many quarters you are eligible for, and whether you are considered a small or large eligible employer.

I had over 500 employees or less than 5 employees. Am I disqualified from claiming the credit?

Employers who had more than 500 full-time employees in 2019 may be considered Large Eligible Employers and are not excluded from the credit. Large Eligible Employers may only claim a credit for wages paid to employees who were not working due to a partial suspension of operations or a reduction in gross receipts.

I received PPP loan forgiveness. Am I disqualified from claiming ERC and PLC?

If you received PPP loan forgiveness, you may still be eligible to claim ERC and PLC. While the PPP loan may limit the amount you can claim, you may still be eligible for the credits. It is important for those who have received PPP loan forgiveness to use an experienced ERC professional to maximize their claim.

Will I have to pay back ERC?

No. Unlike the PPP, which was a loan, the ERC is a tax credit and yours to keep.

Will I have to lay out Pinecrest’s fee?

No. Our fee is on a contingency basis; it is only due once you have received the credit. Our fee is based on the company size; please feel free to reach out for a quote.