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All information below is directly from the Internal Revenue Service.
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:
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.
To qualify for ERC, you need to have been subject to a qualifying government order related to COVID-19 that caused a full or partial suspension of your trade or business operations. The government order may be at the local, state or federal level.
Examples of governmental orders:
IRS will consider you to be partially suspended if more than a nominal part of your business was suspended by a governmental order.
The IRS considers "more than nominal" to be at least 10% of your business based on either the gross receipts from that part of the business or the total hours your employees spent working in that part of the business.
If all parts of your business could operate but you had to modify how it operated, then we will consider you to be partially suspended if you can show that the order had more than a nominal effect on your business. We consider "more than a nominal effect" to be at least a 10% reduction in your ability to provide goods or services in the normal course of your business.
If you changed business practices to alter behavior, such as making store aisles one-way or requiring customers or employees to wear masks, we won't consider that change to have had a more than a nominal effect on your business operations.
For more details and examples, see Notice 2021-20, Section III.D, Questions 11, 17 and 18.
You may be able to withdraw your ERC claim if the IRS hasn’t processed or paid your ERC. Withdrawing the claim means you’re asking the IRS to not process the adjusted return that included your ERC claim.
The IRS reminds anyone who incorrectly claimed the ERC and received a refund that they must pay it back, possibly with penalties and interest.