The Employee Retention Credit (ERC) was a special organization benefit during the COVID-19 pandemic. Recently, there have been some changes and updates regarding this credit, so it's important to understand what it means for you.


This blog post was adapted from material provided by CapinCrouse

Disclaimer: Horizons Stewardship does not provide tax or legal advice. This article is for informational purposes only. Each organization should consult a licensed professional, and we highly recommend CapinCrouse.

What is the Employee Retention Credit (ERC)?

The ERC is a fully refundable payroll tax credit available to qualifying organizations, including nonprofit organizations, churches, and higher education institutions. The credit can be claimed for qualified wages paid between March 13, 2020, and September 30, 2021.

The amount of the credit is calculated as a percentage of qualified wages. For 2020 quarters, the credit is 50% of the maximum qualified wages ($10,000 per employee for the entire year). For 2021 quarters, the credit is 70% of the maximum qualified wages ($10,000 per employee per quarter).

To be eligible, employers must have experienced a significant decline in gross receipts between quarters in 2020 or 2021 (50% or greater decline for 2020 quarters, 20% or greater decline for 2021 quarters), or a full or partial suspension of their trade or business due to COVID-19 related governmental orders.

Organizations can claim the ERC by filing Form 941-X, an amendment to prior-quarter payroll tax filings. The deadlines for filing these amendments are April 15, 2024 (for claims based on 2020 qualified wages) and April 15, 2025 (for claims based on 2021 qualified wages).

Recent Employee Retention Credit (ERC) Updates

The Employee Retention Credit (ERC) has recently faced increased scrutiny from the IRS, leading to a temporary halt in processing new claims. You should consider the impact of all recent updates and considerations before applying for the ERC or those questioning their eligibility.

While navigating the eligibility requirements and application process for the ERC can be challenging, it's important to choose credible assistance. Some unscrupulous third parties charge fees for ERC "assistance" but fail to assess eligibility properly. The responsibility for the claim lies with the organization, not the third party.

The IRS has enacted a processing moratorium on new ERC claims due to concerns about ineligible claims and deceptive practices by aggressive promoters. Taxpayers are advised to work with trusted tax professionals and watch for warning signs of aggressive ERC promoters, such as unsolicited calls or ads, large upfront fees, and refusal to sign the ERC return.

The IRS is developing initiatives to help organizations that were victims of aggressive promoters, including a settlement program for repayment. Organizations can also withdraw improper claims that have not been paid or received a refund.

Help for My Ministry with the Employee Retention Credit (ERC)

As the IRS continues to scrutinize ERC claims, it is essential for ministries to carefully review their eligibility and gather supporting documentation before applying. Working with trusted professionals and being aware of warning signs can help ensure a legitimate claim and avoid potential financial risks.

If you have any specific questions about the Employee Retention Credit (ERC) concerning your ministry, please contact Stan Reiff, Consulting Practice Group Lead, CapinCrouse, or Chris Purnell, Partner and Tax Counsel, CapinCrouse, directly. They can help you understand the complexities of the ERC and guide you through claiming credit. 

The CapinCrouse team is dedicated to serving and helping you achieve your goals. They can answer your questions, provide customized solutions, and ensure your church or nonprofit complies with all the relevant regulations. 

Additional Resources from CapinCrouse

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