The ERC is a refundable tax credit for eligible businesses that continued to pay employees while their operations were suspended due to COVID-19 regulations or had significant declines in gross receipts from March 13, 2020 to Dec. 31, 2021. The credit is equal to 50% of qualified wages per employee, up to a maximum of $10,000.
Although the criteria of the tax credit may seem cut and dry to some, Mike sheds some light on alternative ways direct primary care practices can qualify for the credit and dispels some common myths and misconceptions around the ERC.
“When a lot of folks initially looked at this credit, they only read the objective criteria, which is the gross receipt decline,” said Mike. “But there's also a subjective part of the statute, which is if your business operations were fully or partially suspended by governmental COVID-19 orders. That's where a lot of businesses that didn't have the 20-50% decline in gross receipts, can make a good faith claim for this credit.”
Mike goes on to address some other common myths and misconceptions around the ERC:
“I cannot get this because I also have a Paycheck Protection Program (PPP) loan”
The IRS has amended their guidelines around the PPP and ERC, so now businesses can most likely use both stimulus programs.
"I cannot get this because I did not have a decline in revenue”
Even if your practice did not have a decline in revenue, you may still qualify for the tax credit, based on any operational changes you implemented during the pandemic, including transitioning to virtual visits.
"My CPA will claim this credit on my annual tax return”
If eligible, your practice will need to amend your filed returns for 2020 and 2021 by filing IRS Form 941-X and retroactively claim the ERC for each year.
“I am an ‘essential business’ so I do not qualify”
Although healthcare providers are specified as essential workforce, if your normal operations were disrupted due to COVID-19 regulations, you can still qualify for the ERC.
“My employees continued to work, so I do not qualify”
Again, you can still claim the credit if you experienced a disruption in operations or decline in gross receipts.
Watch the discussion below to learn more about the application process.
To get in touch with the team at Stenson Tamaddon, reach out via their website at https://stentam.com/.