for when deciding on a provider to calculate their potential ERC. Those red flags include promises of a quick turnaround or a lack of counseling over what the tax implications may be in taking the credit.Initially, the ERC was a quarterly, refundable tax credit based on wages for business owners to retain staff during the Covid-19 pandemic. It was set at 50% of up to $10,000 in qualifying wages per employee for the last three quarters of 2020.
The American Rescue Plan Act extended and expanded the ERC to include up to 70% of $10,000 in qualifying wages per employee per quarter in 2021 for the first three quarters, making it much more lucrative to business owners. To qualify, businesses needed to record a drop in revenue during 2020 and or the first three quarters 2021 compared to 2019, or — and it's a big or — they had to be operating under significant government restrictions, which includes many restaurants, daycares and other businesses. Companies that qualify in all available quarters could receive up to $26,000 per full-time employee over the entire credit — although that's not common.
Businesses that took the SBA’s Paycheck Protection Program also still qualify, with their PPP amount being deducted from what they would get from the credit, which is still a significant amount for many businesses owners.The American Institute of CPAs applauded IRS announcement and the creation of a new online form to anonymously report bad actors.