The clock is ticking for small and medium-sized businesses to secure the Employee Retention Tax Credit (ERTC), with the deadline looming on April 15, 2025. Recent insights reveal that over half of eligible businesses have not yet submitted their claims for this significant COVID-era tax refund, potentially leaving billions in unclaimed funds.
Introduced during the COVID-19 pandemic to aid struggling businesses, the ERTC has evolved through various legislative updates, leading to considerable confusion among the nation’s approximately 33 million small and medium-sized enterprises.
Distinct from other pandemic relief options, such as the Paycheck Protection Program (PPP) and COVID-EIDL loans, the ERTC is a tax refund based on previously filed payroll taxes rather than a loan with minimal requirements. This tax credit is designed to return overpaid taxes, enabling qualified businesses to receive refunds that can reach up to $20,000 per employee.
The qualification process is without upfront costs, making it accessible for all U.S.-based businesses to explore their eligibility. A thorough qualification analysis is recommended, especially since the criteria have changed over time. Notably, businesses that were operational in 2020 or 2021, even if they are no longer active, can still qualify based on two main factors: a decline in revenue during those years compared to 2019 and operational disruptions caused by COVID-19 guidelines.
It’s crucial to note that any ERTC funds not claimed by the April 15 deadline will be redirected to other federal programs, emphasizing the need for immediate action to prevent financial losses. The ERTC stands as one of the last opportunities for pandemic-related tax relief for American businesses, and a qualification review is highly encouraged to secure what is essentially rightful tax money for eligible enterprises.
