FAQs

The Employee Retention Tax Credit (ERTC) is a provision of the CARES Act where the IRS offers a rebate to employers for wages they paid to employees during the pandemic.

For most clients, the Silicon process takes approximately 2 months from your initial inquiry to submission of your 941-X to the IRS. The time between your application submission and credit receipt varies widely: the IRS states their review and distribution takes between 1 and 14 months. Most of our clients report receiving a check within 6 months of submission to the IRS.

The total process takes 5-8 months for the majority of our clients.

Organized, accurate due diligence is the best way to speed up the Silicon portion of the process. We, unfortunately, have no control over the IRS timeline: some of our clients received their credit within a month and others had to wait more than one year. Most of our clients report a 6 month wait on the IRS.

Some of our clients have longer timelines due to extenuating circumstances. The IRS is also posting delays. Our team is working at full speed and we are confident our process timeline is accurate for most clients.

The ERTC Process executed through Silicon considers multiple options outlined by available IRS guidance to assess the level of impact your business may have experienced from COVID mandates.

Silicon will provide assistance in responding to an IRS inquiry or audit related to your ERC application for the full audit period.

In addition, Silicon will refund the success fee for one year from delivery in the event that the IRS determines your credit is disallowed. Silicon leverages relationships with two top CPA firms to advise on the appropriate response to the IRS should the need arise.

Credits are subject to Income Tax and the Federal and/or State level in the year that you claim the credits (2020 and/or 2021), not the year that you RECEIVE the credit.

Generally, amended income tax returns will be required. We recommend that you speak with your tax advisor regarding this matter.

No. Business owners who do not qualify do not pay for our assessment.

BDO is one of the nation’s leading accounting and advisory firms.

If it is determined that your business qualifies for ERC, Silicon engages BDO (a Top-5 CPA Firm) to calculate the amount of Credit by quarter and prepare your Company's 941-X for each qualifying quarter.

BDO signs each Form 941-X as the Third Party Preparer, which is a critical point of differentiation between Silicon and other ERC providers.

Silicon must gather documentation of your individual business circumstances in order to provide guidance regarding this issue.

However, FedEx Contractors are seeing an average credit of $350,000 when they qualify for multiple quarters.

With a stock sale you likely forfeit the credit to the buyer, but connect with your CPA and review the terms of your agreement and confirm.

On April 18, 2022, the IRS issued IR-2022-89 to remind employers of penalty relief related to claims for the Employee Retention Tax Credit. This release reminds taxpayers that, consistent with the relief from penalties for failure to timely pay noted in Notice 2021-49, they may be eligible for relief from penalties for failing to pay their taxes if they can show reasonable cause and not willful neglect for the failure to pay.

For general information, we encourage you to visit the Penalty Relief page on IRS.gov and speak with your tax advisor.

Send us a note! We will respond within a business day outlining next steps.

The effect of claiming the employee retention credit on items of income and deduction: The employee retention credit (ERC) was a component of the Coronavirus Aid, Relief, and Economic Security Act.29 The ERC is a refundable credit granted to eligible employers on qualified wages and expenditures. Eligible employers included those affected by COVID-19, and qualified wages and expenditures included those paid during eligible quarters in 2020 and 2021, with varying limits.

One lesser-understood aspect of claiming the ERC, however, is a requirement to reduce wages and expenditures by the amount of the credit claimed. According to IRS guidance, these wages and expenditures are supposed to be reduced in the year in which they were incurred, not necessarily when the credit is claimed or received.30 For example, if an employer files an ERC claim for 2020 after it had already filed that year’s return, the IRS states that this employer must go back and amend its 2020 return to reduce expenditures. To compound this issue, ERC claims have received attention for being slowly refunded, meaning taxpayers may need to have recognized an increase to taxable income well before receiving the credit that caused the increase.

While the guidance the IRS has issued to date on the ERC does provide a general framework on the effects of the credit, a few areas that specifically affect S corporations have yet to be addressed. First, while guidance provides that wages and expenditures are to be reduced by the amount of the credit, it does not specify how that is done. Should employers reduce expenditures and create a receivable for their ERC claim? Or should they consider those wages as nondeductible expenses and treat the ERC as tax-exempt income? Regardless of the methodology, S corporations also need to be provided guidance that does not create a second layer of taxation due to the creation of basis restraints.

An additional ERC question for S corporations is whether the reduction in wage expense causes a reduction in the amount of W-2 wages shareholders may use toward claiming the Sec. 199A qualified business income deduction. The rules under Sec. 199A use vague language when determining whether wages incurred by a trade or business are eligible W-2 wages for Sec. 199A purposes. As W-2 wages are a key component for most businesses eligible for the Sec. 199A deduction, any reduction to this amount could have significant effects.

The Tax Advisor, July 1, 2023

Reference Link: Current developments in S corporations (thetaxadviser.com)