The employee retention credit (ERC), the refundable tax credit designed to reward business owners for retaining employees throughout the COVID-19 pandemic was signed into law on March 27, 2020, as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act and further significantly expanded in 2021.

Eligible business owners can claim up to $5,000 in refundable tax credits for each employee on their payroll in 2020 and up to a $7,000 credit per quarter (excluding Q4) for each employee in 2021. The calculation and procedures are complex, and taxpayers continue to seek help from trusted advisers to help them successfully claim their benefit.

On this Tax Section Odyssey episode, April Walker, CPA, CGMA, Lead Manager — AICPA Tax Section, and Chris Wittich, MBT, CPA, Partner — Boyum Barenscheer, discuss eligibility requirements for the credit, how to help clients with their ERC needs and pitfalls when working with questionable third parties.

What you'll learn in this episode

• Overview of ERC qualifications (2.47)
• What is an acceptable government order (4.50)
• How to collect documentation regarding government orders (9.00)
• Supply chain disruptions effect on the ERC (11.46)
• How to handle clients that don't qualify (13.43)
• Marketing strategies for clients (17.09)
• Contingent fees (21.29)
• Experiences with refund statuses (24.50)
• Wrap-up (27.14)
• A page from Chris's travel journal (28.07)

AICPA resources

• Employee retention credit guidance and resources — The ERC is an important of the COVID-19 relief legislation for small businesses. This library provides the ins and outs of calculating this credit.
• Challenges with contingency fees and the ERC | Tax Section Odyssey — Explore the prospect of contingent fees for ERC work and how regulatory rules govern its usage with the AICPA's April Walker and Ed Karl.

Other resources

• FAQs: Employee Retention Credit under the CARES Act — IRS answers to frequently asked questions on the ERC.

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