The EDGe team has been working hard this year to maximize the Employee Retention Credit (ERC) dollars for many businesses. On behalf of our clients we have requested over $6M in ERC refunds! We are glad we could assist so many clients in getting this much needed funding to keep their businesses going through 2021 and beyond.
We have a few quick updates:
The IRS is still way behind on processing the ERC claims through the 941X form. We have seen a few clients receive their payments but the vast majority have still not been processed. The 941X form must be mailed to the IRS (there is no option to submit electronically) and they currently have a backlog of over 1 million paper forms.
ERC Tax Impact
IRS Notice 2021-49 clarifies that any ERC refund received reduces the wage deduction on the tax return year that the qualified wages were paid or incurred.
In other words, RECEIVING the 2020 ERC refund would require the taxpayer to file an amended 2020 tax return to reduce the wage deduction received by the ERC credit.
The EDGe team will provide the client’s tax advisor the 941X and ERC amounts for them to file the 2020 amended return.
There are groups that are lobbying the IRS to allow this adjustment to be taken on the 2021 return but right now an amended 2020 return will need to be filed. This will reduce your expenses in 2020 and increase your 2020 income so there will be a tax impact.
Q4 2021 ERC No Longer Available
The Infrastructure Act that was signed by President Biden yesterday had a provision in the Act that ended the ERC program as of September 30, 2021. What this means is that there is no Q4 2021 ERC available.
If you know of any clients who have not taken advantage of the ERC for 2020 or 2021 yet, please send them our way. We are happy to help! Email firstname.lastname@example.org.