Frequently Asked Questions for the Employee Retention Credit
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Snap Financial Clients FAQs
First, you need to confirm what kind of sale it was. If it was a full stock sale, new owner has rights to ERC filing and money. If it was an asset sale, then previous owner has rights to filing and ERC money for the quarters he was the owner.
The IRS allows companies to file an amended payroll tax return (941-X) for up to three years after the filings were due. All of 2020 payroll taxes were deemed due on April 15th of 2021. All of 2021 payroll taxes were deemed due on April 15th of 2022.
Therefore 2020 filings must be postmarked by April 15, 2024 and the 2021 filings must be postmarked by April 15th, 2025.
The employee threshold to file for ERC in 2020 is 100 full time employees or less in 2019. The threshold to file for ERC in 2021 is 500 full time employees or less in 2019. The term "full-time employee" means an employee who, with respect to any calendar month in 2019, had an average of at least 30 hours of service per week or 130 hours of service in the month (130 hours of service in a month is treated as the monthly equivalent of at least 30 hours of service per week), as determined in accordance with section 4980H of the Internal Revenue Code. An employer that operated its business for the entire 2019 calendar year determines the number of its full-time employees by taking the sum of the number of full-time employees in each calendar month in 2019 and dividing that number by 12.
It is not. The client will need to file an amended return for applicable tax years affected to offset the wage deduction by the amount declared as a credit.
The ERC will be a reduction on payroll expenses for the year they were claimed. A copy of the guidance is listed below for their CPA to review. We are happy to assist if they have any questions.
Guidance for reduction in payroll expenses due to ERC.
F. Other Rules Related to the Employee Retention Credit
Section 2301(e) of the CARES Act provides that rules similar to section 280C(a) of the Code apply for purposes of the employee retention credit. Section 280C(a) of the Code generally disallows a deduction for the portion of wages or salaries paid or incurred equal to the sum of certain credits determined for the taxable year.
Accordingly, a similar deduction disallowance applies under section 2301(e) of the CARES Act with regard to the employee retention credit, such that an employer's deduction for qualified wages, including qualified health plan expenses, is reduced by the amount of the employee retention credit.
C. Timing of Qualified Wages Deduction Disallowance
Section 2301(e) of the CARES Act, as explained in section III.L. of Notice 2021-20, and section 3134(e) of the Code provide the general rule that an employer's deduction for qualified wages, including qualified health plan expenses, is reduced by the amount of the employee retention credit. The Treasury Department and the IRS have been asked about the timing of the reduction, specifically in the circumstance in which a taxpayer files an adjusted employment tax return to claim the employee retention credit for prior calendar quarters and has already filed a federal income tax return for the tax year in which the credit is claimed on the adjusted return.
Under section III.L. of Notice 2021-20, a reduction in the amount of the deduction allowed for qualified wages, including qualified health plan expenses, caused by receipt of the employee retention credit occurs for the tax year in which the qualified wages were paid or incurred. When a taxpayer claims the employee retention credit because of the retroactive amendment of section 2301 of the CARES Act by section 206(c) of the Relief Act (relating to eligibility of PPP borrowers to claim the employee retention credit) or otherwise files an adjusted employment tax return to claim the employee retention credit, the taxpayer should file an amended federal income tax return or administrative adjustment request (AAR), if applicable, for the taxable year in which the qualified wages were paid or incurred to correct any overstated deduction taken with respect to those same wages on the original federal tax return. Section 2301(e) generally provides, in relevant part, that rules similar to the rules of section 280C(a) of the Code shall apply. Section 280C(a) requires tracing to the specific wages generating the applicable credit. See, generally, Treas. Reg. § 1.280C-1. To satisfy this tracing requirement, the taxpayer must file an amended return or AAR, as applicable.
The IRS has been taking 20-24 weeks to send out the checks.
ERC Payments FAQs
Your 1ST payment of $200 will come once your client has signed the engagement letter, paid the $2600 and have submitted all the correct documents. Payment will be initiated once Jorns has approved all documents. Please note that at any time the team can ask for more documents as required.
Your 2nd payment will be made once Jorns has done the final check of the documents that is being submitted to the IRS.
The last payment will be made when the client has paid the invoice to Jorns. Each client has 30 days to pay the invoice and we will only pay out once the full payment has been made.
Override’s are paid out 30 days after the direct has been paid. Payments are done by 15th of each month.
Yes, we will claw back any commissions paid for client cancellations .
What is the process of and when do I get paid?
We update the back office on daily basis. Please understand each step of the process can take up to 6-8 weeks or longer if there is a delay in any area. Sometimes the client takes a long time to get the information needed back to the OS which can slow things down. Sometimes the qualifications department needs more information to make sure the client qualifies. Once things are done you will see the change in your back office. Please do not bombard our staff asking about the status because we are working daily to get every file through the process quickly but more importantly we will make sure everything is done correctly.
Our policy is to ask the client how many W-2 full-time employees they had during the qualified quarters and if it is over 500 we cannot file for them.
If the client can show proof they have done this or is adamant about the fact that they have registered please email firstname.lastname@example.org and we can check for you. We update this daily and it will soon be automated. Many times the client may have thought they had done it but haven't or told someone to do it that didn't do it correctly or something went wrong. Please work with your client first and as a last resort contact email@example.com with the information they used to register. If they are not found they will need to repeat the process. This is why it is important to walk your client through the process.
It is possible that they didn’t use your link to register. You can re-register them using your link and skip the portion asking for a deposit. Send an email to SDERC@jornscpa.com to let us know you re-registered them, and we will connect you to their account in the back office. This could take up to a week. Please be patient and wait at least 5 days before following up.
Signing the Agreement
It is imperative the client signs the agreement using the same name that they use on their 941 tax forms. If the names do not match it will delay the document collection process. The onboarding specialist will have to ask the client to sign a new engagement letter.
WHAT IS A PROFESSIONAL EMPLOYER ORGANIZATION / PEO
A professional employer organization (PEO) provides comprehensive HR solutions for small and mid-size businesses. Payroll, benefits, HR, tax administration, and regulatory compliance assistance are some of the many services PEOs provide.
HOW DOES A PEO WORK
The PEO processes payroll, withholds and pays payroll taxes, maintains workers' compensation coverage, provides access to employee benefit programs, offers human resources guidance, and handles HR tasks on your behalf, such as benefits administration.
DOES SNAP FINANCIAL AND JORNS AND ASSOCIATES WORK WITH CLIENTS THAT UTILIZE A PEO?
Yes, Jorns will do all the backend work, collecting documents, calculations & qualifications. Because the PEO files the client’s annual 941’s the information is then shared with the PEO point of contact to submit the filing to the IRS.
We do not disclose this information per compliance and privacy reasons.
Our team will personally call them and than them for signing up. We will then send an Onboarding email with the next steps including what documents is needed. This all happens within 24-36 hours after they sign up. We recommend that they check their Spam folder. Mark the sender as safe to receive emails
The back office is updated daily.
Unfortunately for privacy reasons NO IBO should be reaching out to Jorns to follow up on the status of the application. The contract is between your client and Jorns, all updates can be found in your back office.
The new compensation plan will soon be available in the back office.
Before the end of August. Become a Manager and help 3 new personal recruits become Manager. Qualifications can be found on the compensation plan found in the back office.