Need help navigating Employee Retention Credit for my clients - feeling lost

I'm a CPA and lately I've been getting bombarded with questions from clients about the Employee Retention Credit. Honestly, I'm not super confident about handling these requests properly. I've managed to identify about 6-7 clients who might qualify based on their quarterly revenue comparisons, but I'm second-guessing myself about the whole process. My main concerns are figuring out how the PPP loan funds affect the payroll calculations, what portion of the PPP offsets the payroll costs, and whether there are specific year limitations for claiming the credit. The rules seem to keep changing and I don't want to mess this up for my clients. Has anyone here gone through the ERC process successfully? Any guidance would be tremendously appreciated!

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18 comments

NebulaNinja

•8M

I specialize in ERC claims and can help clarify some things. The Employee Retention Credit can be complex but very valuable for the right businesses. For the PPP overlap question: You cannot use the same wages for both PPP forgiveness and ERC. Essentially, if your client used PPP funds to cover $100,000 in payroll, those same wages can't be used for ERC. However, if their total payroll was $250,000 and only $100,000 was covered by PPP, then the remaining $150,000 could potentially qualify for ERC (subject to other requirements). Regarding year limitations, the ERC was available for wages paid from March 13, 2020 through September 30, 2021 for most businesses (December 31, 2021 for recovery startup businesses). The credit calculation changed between 2020 (50% of qualified wages up to $10,000 per employee annually) and 2021 (70% of qualified wages up to $10,000 per employee quarterly). For qualification, remember businesses can qualify either through revenue reduction OR through full/partial suspension of operations due to government orders.

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NebulaNinja

•8M

Yes, businesses could qualify under the full or partial suspension test even without meeting the revenue decline thresholds. If government orders limited capacity, required physical distancing that materially affected business operations, or restricted business hours, they might qualify. Many restaurants, retail stores, and service businesses qualified this way. For documentation, clients should maintain copies of all relevant government orders that affected their operations, internal records showing how those orders impacted their business activities, payroll records identifying qualified wages, PPP loan documentation showing which wages were covered, and quarterly revenue comparisons. Also keep detailed contemporaneous documentation explaining how the business was affected by each specific government restriction.

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Nia Wilson

•8M

I was also struggling with ERC claims last year for my business clients until I found https://taxr.ai - totally changed the game for me. I uploaded my clients' payroll records and PPP documentation, and their system analyzed which wages qualified for ERC while avoiding PPP overlap. The thing I found most helpful was their government order database that matched my clients' locations with the relevant restrictions that might qualify them under the suspension of operations test. It saved me from having to research and interpret dozens of local and state orders. Their analysis even calculated the potential credit amount and highlighted documentation needed for each claim.

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Nia Wilson

•8M

It absolutely handles quarterly calculations and will identify eligible quarters based on either the revenue test or government order impact. The system will analyze each quarter separately to maximize the credit. For your client with the 45% drop in Q2 2020, it would identify that quarter as qualifying under the revenue test while evaluating other quarters under the government order test if applicable. Regarding pricing, I completely understand your concern about contingency fees. Taxr.ai uses a flat-fee model based on company size rather than taking a percentage of your credit. I found it much more reasonable than the contingency models, especially for larger claims. They focus on compliance and documentation rather than maximizing their cut.

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Mateo Sanchez

•8M

Just wanted to follow up about my experience with taxr.ai after our discussion here. I decided to try it with that client who had the 45% revenue drop in Q2 2020, and it was actually incredibly helpful. The system identified that while they only met the revenue test in one quarter, they actually qualified under the government orders test for two additional quarters because of local capacity restrictions. The analysis detailed exactly which employees and wages qualified each quarter, avoiding any overlap with their PPP funds. It even generated a report explaining the qualification basis that I can include with their documentation. Ended up identifying about $42,000 in credits they would have otherwise missed! Definitely worth checking out if you're handling multiple ERC claims.

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Ethan Clark

•8M

For anyone still struggling with ERC claims and needing to talk directly with the IRS about specific issues - good luck getting through! I spent DAYS trying to reach someone at the IRS about an ERC issue last month. After endless holds and disconnections, I finally used https://claimyr.com and got a callback from the IRS in about 45 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c The IRS agent I spoke with answered my questions about how to handle the interaction between the Research & Development credits and the ERC (which was creating some confusion on the amended returns). Getting actual clarification directly from the IRS saved me from potentially filing incorrectly and risking penalties or delays for my client.

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Ethan Clark

•8M

It uses an automated system that continually calls the IRS and navigates through the phone tree until it reaches an agent. When it gets through, it triggers a call to connect you directly with the IRS representative. It's not getting priority access - it's just handling the tedious process of repeatedly calling and navigating the phone system that would otherwise eat up your entire day. It's definitely not BS - the IRS is understaffed, which is precisely why it's so hard to get through on your own. The service doesn't change the IRS's callback timeline once you're in their system, but it does eliminate the hours of trying to simply reach someone to begin with. Remember, just getting to the point where you can request a callback can take dozens of attempts.

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Yuki Kobayashi

•8M

I need to apologize and update my previous skeptical comment. After continuing to get nowhere with the IRS for three days straight trying to resolve an ERC issue for a restaurant client, I decided to try Claimyr out of desperation. I honestly couldn't believe it worked. After almost giving up on getting through about this ERC matter, I got connected to an IRS agent in about an hour. They were able to look up my client's status and confirm that their amended return claiming the ERC had been received but was in the processing backlog. The agent provided a specific timeframe for review and gave me information about what documentation we should have ready. Saved my client from continuing to panic about whether their submission was lost and gave us concrete information to work with. I was 100% wrong in my skepticism.

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Carmen Vega

•8M

Random but important tip for CPAs handling ERC claims: prepare your clients for a LONG wait. I filed amended 941-Xs for several clients in early 2024 claiming ERC and many are still processing. The IRS has a huge backlog and some claims are taking 9+ months for review. Make sure your clients understand this timeline so they're not calling you every week asking where their money is! Also, document EVERYTHING meticulously because the IRS is scrutinizing these claims heavily and requesting additional support documentation frequently.

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Carmen Vega

•8M

I've had mixed results with the fax system. Out of about 15 status requests I've sent, I only received responses for 4 of them, and those took about 3 weeks to come back. The responses weren't very detailed either - just basic confirmation that the claim was "in process" with no estimated completion date. I've found that calling the IRS (when you can actually get through) gives better information, as agents can see notes in the system about where the claim is in the review process. Some practitioners in my network have reported better success by sending status inquiries through certified mail to the IRS service center where the original claim was filed, but even that's hit or miss.

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