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ERC Explained
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ERC Explained
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Who is eligible to claim the Employee Retention Credit? (updated September 14, 2023)

Some promoters tell taxpayers that every employer qualifies for ERC. This is not true. Eligibility for the ERC depends on your specific facts and circumstances.

There are very specific eligibility requirements for claiming the ERC.

Eligible employers can claim the ERC on an original or amended employment tax return for qualified wages paid between March 13, 2020, and December 31, 2021. However, to be eligible, employers must have either:

Sustained a full or partial suspension of operations due to an order from an appropriate governmental authority. limiting commerce, travel or group meetings because of COVID-19 during 2020 or the first three quarters of 2021, or
Experienced a significant decline in gross receipts during 2020 or a decline in gross receipts during the first three quarters of 2021, or
Qualified as a recovery startup business for the third or fourth quarters of 2021.

A self-employed individual who has employees and who otherwise meets the requirements to be an eligible employer may be eligible for the ERC based on qualified wages they paid to employees. Self-employed individuals can't include their own self-employment earnings or wages paid to related individuals when calculating the credit.

Employers in U.S. territories are eligible to claim ERC if they meet other eligibility requirements.

Estimate Your Potential Employee Retention Credit Amount

The amount calculated is based off an average claimed if you were to qualify for all 6 quarters of the ERC program for each employee.

Average full-time W2 employee count in 2020? (exclude owners and family members)*

Average full-time W2 employee count in 2021? (exclude owners and family members)*

Please list owners names and any direct relatives.

Estimated 2020 ERC Credit:

Estimated 2021 ERC Credit:

Estimated 2020-2021 ERC Credit:

*This is an estimate only based off the employee counts entered and does not represent a guarantee of the credit amount you will receive, or that you will qualify for the program. PPP funds received will reduce the ERC credit available.

Company Name*

Full Name*

Full name

Title

Email*

This will just take a second ...

DISCLAIMER: The Employee Retention Credit (ERC) is a robust stimulus program created by the CARES Act. The following questions only take a few minutes and will guide you through the process to determine if your business qualifies. Please read the questions thoroughly and answer them accurately. Please do not guess, estimate, or embellish. ERCbee™ utilizes your answers to determine which quarters we will file for on your behalf.

If you qualify, we will send you a link to create your account and upload important payroll documentation, which will be required to precisely calculate your expected credit. Along with the answers provided in this questionnaire we then conduct a thorough analysis to determine your credit amount. Once your analysis is completed and approved, our team will process and file your return. You will be required to attest the information you provided is true and correct to the best of your knowledge.

Please have the following information about your business available before you begin the questionnaire:

1. Average number of full-time employees for 2019 – a full-time employee is considered someone that works 30+ hours per week.

2. Gross receipts for each quarter of 2019, 2020 & 2021 (total deposits/sales not including PPP funds).

3. Be ready to answer questions about government shutdowns that impacted your business. An example of a qualified shutdown would be If your vendors experienced shutdowns and you couldn't obtain critical goods.

ERCbee™ DOES NOT provide any legal, tax or financial advice and users of this web site should consult with their own lawyer and C.P.A. for legal, tax and financial advice.

1.Did you have employees and pay wages to them between March 13, 2020, and December 31, 2021?

The ERC credit is calculated as a percentage of W2 wages paid - 1099 wages do NOT qualify. Note: The wages of majority owners (over 50%) and their immediate relatives (even if paid W2) do not qualify for the ERC program. Wages for all other W2 employees still qualify. For more info, see IRS.gov/ercqualified

Select the answer below...*

Yes

Based on your responses, you do not qualify for the ERC Program.

2. During that time, were you A self-employed individual who didn't have employees or A household Employer?

Select the answer below.*

Yes

Based on your responses, you do not qualify for the ERC Program.

3. Did your trade or business experience a significant decline in gross receipts during the eligibility periods during 2020 or the first three calendar quarters (Jan. through Sept.) of 2021?

If you select yes, you may be eligible for ERC. You will need to confirm that your decline in receipts meets requirements. See the ERC frequently asked questions: IRS. gov/ercdecline

Select the answer below.*

Yes

you may be eligible for ERC. You will need to confirm that your decline in receipts meets requirements. See the ERC frequently asked questions: IRS. gov/ercdecline. If you meet the requirements,

4. Were you a recovery startup business? That's certain businesses or organizations that began carrying on a trade or business after February 15, 2020. The new trade or business doesn't need to be pandemic- or recovery-related. Annual gross receipts of $1 million or less for the three years preceding the quarter for which they are claiming the ERC.

For more info, see the ERC frequently asked questions: IRS.gov/ercrecovery

Select the answer below.*

Yes

yes, you may be eligible for the ERC, but you must confirm that your gross receipts meet specific requirements related to recovery startup businesses. See the ERC frequently asked questions: IRS.gov/ercrecovery. If you meet those requirements,

5. Was the operation of your business or organization fully or partially suspended by a government order due to the COVID-19 pandemic during 2020 or the first three calendar quarters (Jan. through Sept.) of 2021? It must have been a government order, not guidance, a recommendation or a statement.

For more info, see the ERC frequently asked questions: IRS.gov/ercqualifying

Select the answer below.*

Yes

you may be eligible for the ERC. See #6, and make sure you can show that the government order was a) related to COVID-19 and b) resulted in your trade or business operations being fully or partially suspended.

Based on your responses, you do not qualify for the ERC Program.

6. Are you claiming the ERC because of supply chain issues?

Q1. Was my business or organization fully or partially suspended if I had a supply chain

issue? (updated September 14, 2023)

A1. A supply chain issue by itself does not qualify you for the ERC.

The IRS provided a narrow, limited exception if an employer was not fully or partially suspended but their supplier was. However, it applied only when the employer absolutely could not operate without the supplier's product and the supplier was fully or partially suspended themselves.

In addition to having the supplier's governmental order, you will need to show that:

The government order caused the supplier to suspend operations,
You couldn't obtain the supplier's goods or materials elsewhere (regardless of cost), and
It caused a full or partial suspension of your own business operations.

You should be wary of anyone who says you qualify for ERC based on supply chain issues without asking for specific information about how your business or organization was affected, your supplier's situation and documentation.

Select the answer below..*

Yes

be extremely cautious; this is a common point of confusion, and even if you experienced supply chain disruptions you often will not be eligible as a supply chain issue by itself does not qualify you for the ERC. Review carefully the ERC frequently asked questions at IRS.gov/ercsupply, as they address supply chain issues.

Are you using leased employees also referred as a PEO?

Professional Employer Organizations will required some additional work. We will need to make sure the PEO is willing to help you file the credit.

Select the answer below...*

Yes

Amount of PPP funds received in 2020 and 2021.

Total Amount 2020 and 2021

How many full-time employees did you average in 2019 ?

A full-time employee is classified as someone that worked at least 30 hours per week, or 130 hours per month in 2019. Remember, this question is based on the average amount of employees during 2019....

IMPORTANT: If you own over 50% of multiple companies, the IRS aggregate rule requires you to combine the FT employee counts of all companies that you were a majority owner of during 2019 for this question.

Example: You were the majority owner of ABC Company, which averaged 50 FT employees in 2019. You also were the majority owner of 123 Company, which averaged 75 FT employees in 2019. According to the aggregate rule, the employee count of both companies must be combined for the ERC program. Although both companies can be entered for the program, they would both be classified as over 100 employees.

Note: Businesses with over 100, but under 500 FT employees in 2019 do not qualify for ERC funds in 2020. Businesses with over 500 FT employees in 2019 do not qualify for the ERC program, except for actual wages paid to employees that did not work due to a government shutdown.

Part Time Employees: Part time employee wages DO qualify for the ERC program. This question only requires full time employee count to determine qualification.

Need some clarification?

Select the answer below.*

My business averaged less than 100 full-time employees in 2019

My business averaged over 100, but under 500 full-time employees in 2019

My business averaged over 500 full-time employees in 2019

Based on your responses, you do not qualify for the ERC Program.

You're doing great! Quick review of qualification scenarios

The following screens will present three different ways that your company can qualify for the Employee Retention Credit. Please answer the questions in these three sections to determine your eligibility for the program.

Qualification #1: Revenue Reduction

The most straightforward way to qualify for the Employee Retention Credit is through provable revenue reduction during the qualification period of the program. The revenue reduction requirements for qualification are below.

2020 - 50% reduction of gross sales for the 2020 quarter as compared to the same quarter in 2019.
2021 - 20% reduction of gross sales for the 2021 quarter as compared to the same quarter in 2019 (or 2020 if you were not in business during the quarter in 2019). An alternative lookback option allows the business to use the previous quarter compared to the same 2019 quarter to qualify

Where your gross recieipts (total deposits) for at least one quarter in 2020 less than 50% of your gross receipts for the same quarter in 2019?

Make your - selection below.*

Yes

Which 2020 quarters were you down 50% of gross compared to 2019 levels?

Select answers below*

Did your gross receipts get back to 80% of 2019 pre-COVID levels?

Question: Make your selection below.*

Yes

Example: In any quarter of 2020 did your gross receipts return to 80% of pre-COVID levels?

Which quarters did your gross receipts get back to 80% of 2019 levels of the same quarter?

Select applicable quarters below*

Did not suffer revenue loss

Revenue Reduction

The most straightforward way to qualify for the Employee Retention Credit is from a qualified revenue reduction during the qualification period of the program. The revenue reduction requirements for qualification are below.

ERC Revenue Reduction Qualification

2021 - 20% reduction of gross sales for the 2021 quarter as compared to the same quarter in 2019 (or 2020 if you were not in business during the quarter in 2019). The alternative look-back option allows the business to use the previous quarter compared to the same 2019 quarter to qualify

Note that for any periods you qualify for revenue reduction we will request P&L statements to substantiate your claim. Click next below to begin.

Half Way There! 2021 - Q1 Revenue Qualifier

The 2021 credits are the largest in the ERC program with up to $7,000 per employee per quarter.

Select the answer that is true for your business*

My Q1 2021 gross revenue was 20% lower than Q1 2019 (or Q1 2020 if not in business in Q1 2019)

This does not apply to my business

2021 - Q2 Revenue Qualifier

The 2021 credits are the largest in the ERC program with up to $7,000 per employee per quarter.

Make your selection below.*

My Q2 2021 gross revenue was 20% lower than Q2 2019 (or Q2 2020 if not in business in Q2 2019)

This does not apply to my business

2021 - Q3 Revenue Qualifier

The 2021 credits are the largest in the ERC program with up to $7,000 per employee per quarter.

Make your selection below.--*

My Q3 2021 gross revenue was 20% lower than Q3 2019 (or Q3 2020 if not in business in Q3 2019)

This does not apply to my business

How many types of supply items were you unable to procure due to supply chain disruption? List the specific materials and goods that were affected by this disruption.

Supply Item #1*

Supplier of Item #1*

Partial or Full Operational Suspension

Qualifying government orders

Q1. What kind of government orders qualify my business or organization for the ERC? (added July 28, 2023)

Q2. Can I rely on a recommendation, bulletin or statement issued by a government authority to qualify for ERC? (updated September 14, 2023)

Q3. Is being subject to a government order enough to make me eligible for ERC? (added July 28, 2023)

A3. No. You need to demonstrate that the government order was related to COVID-19 and that it resulted in your trade or business being fully or partially suspended.

Q4. What does it mean to be fully or partially suspended? (updated September 14, 2023) Q5. What does "more than nominal" mean when considering whether my business or organization was partially suspended? (added September 14, 2023)

Q6. If my business was suspended by a government order for only part of a quarter, am I an eligible employer for the entire quarter? (added September 14, 2023)

A6: You are considered an eligible employer for the entire calendar quarter if your business operations were fully or partially suspended due to a governmental order during a portion of a calendar quarter. However, you can claim the ERC only for wages paid during the suspension period, not the whole quarter.

Type of Suspension*

Brief Description of Suspension*

I have another suspension to claim

Type of Suspension*

Brief Description of Suspension*

In which 2021 quarters were you impacted by these suspensions? (Uncommon)

ERC Qualification Results

Huzzah! Based on your responses, you qualify for each of the quarters listed below. Depending on your qualifications, you will see your substantiation statements below, which the IRS will use to verify your claim.

2021 Total Quarters Qualified

Estimated 2020-2021 ERC Credit

Great news! Based on your answers you DO QUALIFY for the ERC program.

After submitting this form, one of our dedicated ERC experts will verify your qualification and email you a link to create your account, where you will upload your documents to our secure encrypted cloud for processing.

IMPORTANT: Please add processing@ercbee.com & info@ercbee.com to your email safe sender list or you may not receive communication as your ERC credit is processed.

Phone Number*

Company Address*

Street Address Address Line 2 City State / Province / Region ZIP / Postal Code Country

Who introduced you to ERCbee™?

Optional - Email of the individual that handles your payroll. (We will email them a copy of your document upload link)

What industry are you in?

By checking you attest that the answers provided are accurate to the best of your knowledge and agree to our terms & conditions.*

By checking you attest that the answers provided are accurate to the best of your knowledge and agree to our terms & conditions.

Do you consent to receive SMS messages from Ercbee?

We will use SMS messages to send you reminders, updates on your process, and other important information. You can unsubscribe at any time. By texting STOP.

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Credit Calculator

Who is eligible to claim the Employee Retention Credit? (updated September 14, 2023)

Estimate Your Potential Employee Retention Credit Amount

This will just take a second ...

1.Did you have employees and pay wages to them between March 13, 2020, and December 31, 2021?

Based on your responses, you do not qualify for the ERC Program.

2. During that time, were you A self-employed individual who didn't have employees or A household Employer?

Based on your responses, you do not qualify for the ERC Program.

3. Did your trade or business experience a significant decline in gross receipts during the eligibility periods during 2020 or the first three calendar quarters (Jan. through Sept.) of 2021?

5. Was the operation of your business or organization fully or partially suspended by a government order due to the COVID-19 pandemic during 2020 or the first three calendar quarters (Jan. through Sept.) of 2021? It must have been a government order, not guidance, a recommendation or a statement.

Based on your responses, you do not qualify for the ERC Program.

6. Are you claiming the ERC because of supply chain issues?

Are you using leased employees also referred as a PEO?

Amount of PPP funds received in 2020 and 2021.

How many full-time employees did you average in 2019 ?

Based on your responses, you do not qualify for the ERC Program.

You're doing great! Quick review of qualification scenarios

Qualification #1: Revenue Reduction

Where your gross recieipts (total deposits) for at least one quarter in 2020 less than 50% of your gross receipts for the same quarter in 2019?

Which 2020 quarters were you down 50% of gross compared to 2019 levels?

Did your gross receipts get back to 80% of 2019 pre-COVID levels?

Which quarters did your gross receipts get back to 80% of 2019 levels of the same quarter?

Revenue Reduction

Half Way There! 2021 - Q1 Revenue Qualifier

2021 - Q2 Revenue Qualifier

2021 - Q3 Revenue Qualifier

Partial or Full Operational Suspension

ERC Qualification Results

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You saw your team through NOW, let us help you.

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