How Employers in U.S. Territories Can Qualify for the Employee Retention Credit (ERC) in 2023
Employers located in U.S. Territories such as Guam can reap the benefits of the Employee Retention Credit (ERC) by offering "eligible wages." According to Article 3121(b) of the Code, wages paid by employers within U.S. territories are subject to FICA taxation. Thus, qualified employers are those located in the United States Territories who offer eligible salaries and meet the criteria set forth by the credit.
Get a refund of up to $26,000 per W-2 employee! For the 1st, 2nd, and 3rd quarters of 2021, if an organization's gross receipts have declined by more than 20% compared to the same quarter in 2019, they may qualify as an eligible employer. The 2020 gross receipts decline requirements are stricter, requiring a decline of more than 50%.
Businesses that have received PPP loans may also be qualified for the Employee Retention Credit (ERC). The original CARES Act had a prohibition for organizations receiving PPP funding from claiming the ERC, but this restriction was lifted as part of the Consolidated Appropriations Act, which extended and enhanced the ERC in December 2020.
Employers located in U.S. Territories should evaluate their eligibility for the ERC, as many organizations may be eligible for significant cash benefits in addition to PPP benefits they have already received, due to COVID-19 related restrictions on their normal operations in 2020 and 2021.
The initial ERC program allowed businesses to claim the tax credit for a three-year period, which means they can claim expenses from 2020 until April 15th, 2024 and expenses from 2021 until April 15th, 2025. With the deadline approaching, it might be beneficial to speak with our ERC tax professionals to determine if claiming the ERC is a suitable option for your business.
To ensure a precise calculation of your ERC tax credit, it is advisable to seek the assistance of a CPA who specializes in the ERC. Furthermore, be sure to file your claim before the deadline to maximize the benefits of the ERC tax credit.
If you have any doubts about your eligibility for the ERC tax credit, it's best to consult a tax expert for proper guidance.