Typically, a nonprofit with W-2 employees must fall into at least one of the two following categories in order to be eligible for ERC:

• The non profit experienced decreased revenue from quarters 1-4 in 2020 and 1-3 in 2021, compared to 2019
• The non profits were impacted by government-mandated restrictions

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Government mandated restrictions may include things like capacity or hourly restrictions, restrictions on public gatherings, remote work, or other restrictions that limit services. If your nonprofit experienced any of these, consult with a professional to determine your eligibility. 

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Nonprofits who received the Paycheck Protection Program loan (PPP 1 and/or 2) can still be eligible for ERC, assuming they experienced decreased revenue or were affected by COVID restrictions. 

Speaking with a CPA and team of professionals can help you to better understand if your nonprofit may be eligible. In general, any sort of nonprofit organization may be eligible, including but not limited to:

• Schools
• Hospitals
• Museums
• Performing arts centers
• Churches

Business owners who have claimed the ERC may be wondering when they can expect to receive the tax credit. With so many businesses being affected by the pandemic, the IRS has a high volume of applications to process. Every case is unique and will have a different timeline. Your refund could be processed in about 8 months, although it may take longer. 

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If you wish to check the status of your refund, you may call the IRS, or use the “Where’s My Refund?” feature on the IRS website.

Claiming the Employee Retention Credit can be a needed relief for many nonprofit organizations, but it is important to make sure you and your tax planners are diligent and thorough when examining your eligibility. It is critical to note that the IRS will carefully examine your claim for this credit. Submitting a claim with false information can lead to compliance risk such as ERC audits in the future, setting up potential disaster.

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Strategic Tax Planning’s experienced tax professionals and CPAs will work closely with you and your nonprofit, ensuring all of your Employee Retention Credit qualifications and facts are accurate and in order. We are here to help you receive your deserved relief for persevering during difficult financial times.