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Employee Retention Credit

Retaining Employees During the Pandemic

What is Employee Retention Credit?

The Employee Retention Credit (ERC) was introduced as part of the Coronavirus Aid, Relief and Economic Security (CARES) Act to incentivize employers to retain employees during the pandemic by offering a refundable tax credit against employment taxes.

Who is eligible for the Employee Retention Credit?

2020 ERC Eligibility

  • The deadline to apply for the 2020 ERC was April 15, 2024 and this credit is no longer available for the 2020 calendar year.

2021 ERC Eligibility

  • Significant Decline in Gross Receipts: Employers that had more than a 20% decline in gross receipts in Q4 2020, Q1 2021, Q2 2021 or Q3 2021 as compared to Q4 2019, Q1 2019, Q2 2019 or Q3 2019; OR
  • Partial Suspension of Operations: Employers that were disrupted due to COVID-19 Orders limiting commerce, travel or group meetings

How Can We Help?

We utilize a proprietary ERC technology that allows automation and standardization of services connecting to pre-populated government orders to efficiently calculate and document the credit benefits including:

  • Considers all IRS guidance while assessing whether an employer qualifies for the ERCs.
  • Determines if the company is an eligible employer and coordinate with a company’s tax and other applicable internal departments
  • Calculate the ERCs, document eligible employer status, advise on how to reduce wage expense deductions (for income tax purposes) in the year to which the ERC relates.
  • Ensures there is no inclusion of PPP-funded wages
  • Complete and sign the Forms 941X for purposes of claiming the ERC
  • Assists with Information Document Requests (IDRs) during IRS ERC audits to help your company resolve issues related to previous ERC applications lacking proper documentation.

To best serve you, we offer a complimentary assessment to determine eligibility and quantify estimated tax credit benefits.

For more information on eligibility requirements for the Employee Retention Credit, please reach out to your local Cherry Bekaert professional today.

Contact Our Employee Retention Credit Team

  • IRS ERC Audits

    An IRS ERC Audit is a formal review, by the IRS, which ensures that businesses have accurately asserted their ERC claims. The selection for an audit hinges on diverse criteria, encompassing potential disparities or heightened risk factors. A comprehensive understanding of the audit process is indispensable for businesses to ready themselves adequately.

    For swift resolution in an IRS ERC audit, leverage Cherry Bekaert as professional representation. Our team is familiar with ERC and IRS audits and can efficiently address IRS requirements, ensuring a prompt and comprehensive response especially when eligibility and calculations are pre-documented.

  • What Sparks an ERC Audit?

    Several factors may set in motion an ERC audit, including:

    • Discrepancies observed in claimed ERC amounts when compared to data IRS has available from prior filings made by the employer
    • Obvious errors in the filing, including no tax preparer signature on the filing, indicating that the claim may be fraudulent
    • Inability for the IRS to determine that the employer’s income tax properly reflects the claiming of the credit
    • High credit claims support the administration’s initiative of focusing on high income taxpayers
  • What Does the IRS do During an ERC Audit?

    • Start with an interview about the business and how eligibility for and calculation of the ERC was performed
    • An Information Document Request (IDR) will then be issued to request support for the determination of eligibility and the calculation
    • At the conclusion of the audit, the IRS will issue a report authorizing the payment of the credit or disallowance of some or all the credit
    • If some or all the credit is disallowed, the taxpayer can appeal the decision of the IRS
  • What Can Cherry Bekaert Do for You?

    • Before an IRS examination begins
      • Review the documentation and calculations that you have so that you are confident that you are entitled to the credit claimed
    • Provide additional documentation so that you have what is needed if an IRS exams your claims
    • After the IRS initiates an examination
      • Represent you before the IRS, helping with the agent interview and responding to the IDR on your behalf
      • Efficiently converse with the IRS regarding the agent’s concerns and satisfying the concerns based on the IRS authority

How to Prepare for ERC Audits: A Strategic Preparation Guide

Efficient Strategies for ERC Audit Readiness

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Let's Talk

Martin Karamon

Partner, Tax Credits & Incentives Advisory

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Carolyn Smith Driscoll

Carolyn Smith Driscoll

Director, Tax Credits & Incentives Advisory

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Deborah Walker

Director, Tax Services

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Contact Our ERC Professionals