IRS Tax Credits Available for Business (FFCRA and ERTC)

[cgr]

I have a few entities I need to aggregate as they have some same ownership. If I will need to aggregate all of them I will be over 500 workers making me not eligible

The ownership structure of some of the entities changed a few times since 2019

My question is do I go by the ownership structure of 2019? Structure by quarter of filing? Structure now when I file?

TIA

ERC requires employers to identify the average number of full-time employees employed during 2019 to determine if they are considered a small or large employer (over 100 employees for ERC claimed for 2020, over 500 employees for ERC claimed for 2021).
The 2019 calendar year is the only time period used to calculate the number of employees (not taking into account startup businesses), and that's the period you'll need to look at your ownership structure to see if you need to aggregate the number of employees. Even if employee counts went up in 2020 or 2021 and you're now above the 100/500 limit, it would not signify.
If your ownership structure changed mid-2019 or if you're also looking to apply for startup businesses, then that would complicated things.

As a reminder, here's how to calculate full-time employees:

The term "full-time employee" means an employee who, with respect to any calendar month in 2019, had an average of at least 30 hours of service per week or 130 hours of service in the month (130 hours of service in a month is treated as the monthly equivalent of at least 30 hours of service per week), as determined in accordance with section 4980H of the Internal Revenue Code. An employer that operated its business for the entire 2019 calendar year determines the number of its full-time employees by taking the sum of the number of full-time employees in each calendar month in 2019 and dividing that number by 12.

You might want to get a professional to confirm that you're applying the affiliation rules correctly- the way the IRS explains it in words is not exactly what it looks like on paper. You can PM me for a basic explanation if needed.

[cgr]

The 2019 calendar year is the only time period used to calculate the number of employees (not taking into account startup businesses), and that's the period you'll need to look at your ownership structure to see if you need to aggregate the number of employees. Even if employee counts went up in 2020 or 2021 and you're now above the 100/500 limit, it would not signify.
If your ownership structure changed mid-2019 or if you're also looking to apply for startup businesses, then that would complicated things.

To clarify, the above is only to tabulate the number of employees to determine which ERC rules apply.

You'll then need to run a separate aggregation calculation for sales to see if you qualify based on the 80% (2020) or 20% (2021) sales reduction across all aggregated entities. This will work in your favor if you have an aggregated reduction, even if some individual entities don't have a reduction, as all of them will qualify. It will also work against you if individual entities have a reduction, but on an aggregated basis you don't have a reduction, in which case none of the entities will qualify.
If you're applying based on government shutdown then each entity would be evaluated separately, and not on an aggregated basis.

[TBD]

NY and CA have special subtraction adjustments for federal wages that are not deductible under IRC Section 280C. Thus, for NY and CA tax purposes, the ERC is not taxable. The NYS subtraction adjustment is reported as a Code S-205 adjustment on NYS Form IT-225.

https://fhllp.com/state-taxability-of-the-employee-retention-credit-erc/

[shulemw]

Anybody knows for a ERC refund of 260k from Q2 of 2020. Approx what will be the interest the IRS will add me to it?

[lakewood34]

New claims for the employee retention credit, or ERC, won’t be processed until at least 2024, the IRS announced Thursday. The tax agency also plans to give tougher scrutiny to an existing queue of more than 600,000 requests. The IRS will allow employers with pending claims to withdraw them and will let many repay their refunds if they no longer think they qualify.

[AsherO]

New claims for the employee retention credit, or ERC, won’t be processed until at least 2024, the IRS announced Thursday. The tax agency also plans to give tougher scrutiny to an existing queue of more than 600,000 requests. The IRS will allow employers with pending claims to withdraw them and will let many repay their refunds if they no longer think they qualify.

It’s been costing them much more than expected and an entire industry has developed around helping employers claim this (including amending returns) and it isn’t clear all those claims are on the up and up, so the IRS is reacting to that.