For most companies, the credit could be claimed on salaries until September. In addition, since the beginning of the ERTC program, several laws have come into effect that affect the way in which credit can be applied for. The CARES Act also allowed employers to file Form 7200 to request advance payment of any refundable ERTC amount. Therefore, eligible companies that didn't initially apply for their ERTC could do so until 2024, depending on when they originally filed or paid their business taxes.
The employee retention tax credit (ERTC), another part of the CARES Act, was designed to encourage companies to keep employees on their payroll during the COVID-19 pandemic. Any employer that was treated as part of a single employer under the aggregation rules (more than 50% of common ownership) was also not eligible for the ERTC if any member of the employer's aggregate group received a PPP loan. However, if your company did apply for a PPP loan, you cannot apply for the ERTC for the same salary counted for PPP forgiveness. The ERTC can be used to offset applicable taxes under Section 3111 (a) of the Internal Revenue Code and any taxes under Section 3221 (a) that are attributable to the rate in Section 3111 (a).
In addition, several other stimulus credits not related to COVID-19 are restricted to employers receiving ERTC. The ERTC was designed to help small businesses that lost revenue due to the pandemic, but only a few businesses are eligible. The CARES Act also provided that qualified salaries could not exceed the amount that would have been paid to employees for working an equivalent duration during the 30 days immediately preceding the period in which those salaries and other compensation were eligible for the ERTC. Eligible companies, Smith said, can file a retroactive ERTC refund request on qualified wages previously paid during the past calendar quarters by filing Form 941-X, the employer's adjusted quarterly federal tax return, or the request for reimbursement.
The early termination of the ERTC means that companies must pay withheld payroll taxes to monetize their early credit, advised Marvin A. Under the CARES Act, eligible nonprofit organizations could accept the ERTC under the same rules as eligible for-profit entities. Before receiving the credit, employers can choose to withhold the value of employment taxes up to the amount of the ERTC, instead of depositing it, without penalty. The deadline for eligible businesses to apply for the ERTC is with their quarterly Form 941 tax returns, which are due on July 31, October.
Since then, the ERTC has been expanded twice so that more struggling companies can use it to lower their federal tax bill.