ERC for Tax-Exempt Orgs: A Miniseries

Employee Retention Credits (ERC) have been a hot topic in 2021 (just about as fun to follow as fan favorite series, Ted Lasso, for all of the feel-good comedy/sports loving accountants out there). However, limited guidance, PPP overlaps, and a lot else going on have put the credits on the back burner for many nonprofits and other tax-exempt entities. With a longer time horizon to file, and slow processing by the IRS, many of our clients have been patiently watching, unsure if they are eligible or even want to pursue ERC. In the meantime, many might be spending that “spare time” adding Apple+ to their many subscriptions (cutting the cord=cost savings??) to check out Ted and friends.

However, since the beginning of the year, CLA has helped hundreds of tax-exempt clients evaluate eligibility and claim hundreds of millions of dollars in tax credits. We wanted to take a breather  and compile—for you!—some of the most common situations, questions, and strategies to consider when applying for ERC. We have so much exciting information to share with you that we wanted to break it up a bit into a miniseries of sorts – and as we have learned in the pandemic – who doesn’t love a good miniseries? Over the next few weeks, we will be rolling out our binge-worthy ERC Greatest Hits right here on the blog. Tune in!

Sneak preview of upcoming topics:

1. ERC: The latest and greatest
   1. PPP Safe Harbor
   2. Timing and the 990
2. ERC: The history
   1. Tax credit timeline
   2. 2021 Q4 Credits *may* be eliminated
   3. 2020 vs. 2021 credits (an overview)
3. ERC: Back to basics
   1. Small employer, large employer, and determining employer size
   2. Eligibility
      1. Gross receipts
      1. Full or partial shut-down
4. Claiming credits via form 941-X
5. ERC and PPP: Match made in heaven?
   1. Maximizing ERC + PPP + FFCRA + Grants
   2. Supporting documentation
6. ERC: Recording the credits
   1. For financial statements/audit
   2. For tax purposes

We know this topic is all sorts of confusing, ever-changing, and overwhelming.  It may not be easy, but as Ted Lasso would say, “Takin’ on a challenge is a lot like ridin’ a horse. If you’re comfortable while you’re doin’ it, you’re probably doin’ it wrong.”