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Businesses could get thousands from this little-known CARES Act Program

The Employee Retention Credit program allows qualifying small businesses to collect thousands of dollars in refunds for every employee on their payroll.

CONCORD, N.C. — Small businesses that lost money due to the coronavirus pandemic stand to benefit from a little-known CARES Act program that's already helping gyms, restaurants, salons, and others collect major federal refunds.

Michael Mishkin, the owner of Mike's Deli and Bagels, is slated to receive a $47,000 Employee Retention Credit (ERC), which is even more than the forgiven Paycheck Protection Program loan he previously received.

"COVID hit and that's slowed us down quite a bit," the Concord business owner said. "It reassures you that, 'Ok, we can keep going here.'"

CPA Stephen Swanick helped Mishkin amend his tax return. He said recent federal changes allow small businesses to collect refunds for 2020 and for every quarter in 2021.

"This Employer Retention Credit is I think going to be bigger than the PPP program when we all look back on this," Swanick said, 

Over the course of roughly a month, Swanick said he's helped secure more than $2.5 million for businesses locally and nationwide.

"I worked with a gym that's going to be getting about $20,000 back and I've worked with a steakhouse that's getting $220,000 and I about put someone on the floor when I told a salon out in California that they're getting $400,000 back," he said. "There's a pile of money waiting for you."

Answering your questions: Join Nate for a live Q&A Thursday at 1:30 p.m.

Swanick said the ERC is specifically for small businesses that suffered a federally set quarterly drop in revenue, were forced to shut down, or faced capacity limits.

Here are the qualifications:

Employer Retention Credit  2020 requirements

  • Must have averaged less than 100 full-time employees in 2019 (99 full time and 500 partime would still be eligible)
  • Up to $5,000 per employee available as a refund from the IRS (regardless of what you paid-in)

Available to all employers/industries that:

  • suffered a 50% revenue decrease for a quarter vs 2019 (ex: Q2 2019 vs Q2 2020), or 
  • were forced to shut down by government order, or
  • faced a capacity limitation (i.e. restaurant, bar, gym, etc.)

Employer Retention Credit  2021 requirements

  • Must have averaged less than 500 full-time employees in 2019 (499 fulltime and 5,000 parttime would still be eligible)
  • Up to $7,000 per employee per quarter, available as a refund from the IRS (regardless of what you paid-in)

Available to all employers/industries that:

  • suffered a 20% revenue decrease for a quarter vs 2019 (ex: Q1 2019 vs Q1 2021), or 
  • were forced to shut down by government order, or
  • faced a capacity limitation (i.e. restaurant, bar, gym, etc.)

To secure the retroactive 2020 and 2021 Q1 ERC, Swanick said you, your accountant, or tax preparer need to file a paper 941-X to amend your Form 941.

"Employers could technically do this themselves, but if they outsource their tax returns, payroll, etc., they will probably not have the expertise to do it," he said.

As for collecting the ERC for the remainder of 2021, Swanick said businesses can apply for an Advance Tax Credit for the next three quarters and/or withhold tax deposits in preparation.

"Talk to your tax preparers, CPAs, and internal accountants," he recommended.

Mishkin took that advice and his business is now even more financially stable because of it.

"We're getting to a place now, where I do have to hire even more people, which is even better," he said.

Swanick said it usually takes six to eight weeks for businesses to receive their money.

"It's very gratifying to know that there now is a business here in my own backyard that now has the money to weather the storm," Swanick said.

Contact Nate Morabito at nmorabito@wcnc.com and follow him on Facebook, Twitter and Instagram.