ERC4Business
Member
- Joined
- Apr 4, 2022
- Messages
- 15
It has come to my attention that some CPAs of business owners think that if their clients (you) receive $26,000 for each employee you have, you will have to pay it back! Sorry, that is not correct. Not to knock the profession, but many "CPSs" are just glorified bookkeepers.
The ERC credit refunds payroll costs already spent.
There is no need to pay back the ERC, and is in a sense, similar to the stimulus check that the everyday taxpayer received. These "credits" are both a suspension of your employer portion of FICA taxes, and a check for the remainder of the amount due to your facility.
To be eligible your business just had to be affected by Covid in someway. This can be as minor as having to close for a day, requiring appointments, a reduction in revenue because your clients were affected, restriction of operating hours etc. As you can see, the requirements are pretty broad since they set aside $5.1 Trillion for the ERC program for US business owners. These changes are the latest effort to stabilize the economy and provide emergency relief regardless of past programs you may have participated in (including PPP). The ERC is not a loan, nor a grant.
First, employees who receive a W-2 are paid through their employer's payroll and have their payroll taxes withheld throughout the year. Now, the ERC tax credit is applied against employment taxes for the business, offsetting most if not all liability in employment tax. What happens if your credit is more than you owe in employment taxes? The IRS sends you a check back for the difference! So, let your CPA know, it is not a loan, grant or some form of PPP.
If your "bookkeeper" is still not convinced let them know the ERC was made available under section 3134 of the Internal Revenue Code (Code), enacted by section 9651 of the American Rescue Plan Act of 2021 (the ARP). Let them do their homework while you collect your money. The choice is yours. The benefit was first $33,000 per W2 employee, but in late 2021, it was reduced to $26,000. Who knows when they will lower it again????
The ERC credit refunds payroll costs already spent.
There is no need to pay back the ERC, and is in a sense, similar to the stimulus check that the everyday taxpayer received. These "credits" are both a suspension of your employer portion of FICA taxes, and a check for the remainder of the amount due to your facility.
To be eligible your business just had to be affected by Covid in someway. This can be as minor as having to close for a day, requiring appointments, a reduction in revenue because your clients were affected, restriction of operating hours etc. As you can see, the requirements are pretty broad since they set aside $5.1 Trillion for the ERC program for US business owners. These changes are the latest effort to stabilize the economy and provide emergency relief regardless of past programs you may have participated in (including PPP). The ERC is not a loan, nor a grant.
First, employees who receive a W-2 are paid through their employer's payroll and have their payroll taxes withheld throughout the year. Now, the ERC tax credit is applied against employment taxes for the business, offsetting most if not all liability in employment tax. What happens if your credit is more than you owe in employment taxes? The IRS sends you a check back for the difference! So, let your CPA know, it is not a loan, grant or some form of PPP.
If your "bookkeeper" is still not convinced let them know the ERC was made available under section 3134 of the Internal Revenue Code (Code), enacted by section 9651 of the American Rescue Plan Act of 2021 (the ARP). Let them do their homework while you collect your money. The choice is yours. The benefit was first $33,000 per W2 employee, but in late 2021, it was reduced to $26,000. Who knows when they will lower it again????
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