ERC Still Available for Businesses that Opened During Pandemic

ERC mills and large Tax Credit providers will NOT let you know about this because most businesses that opened during the pandemic did so with less than 5 employees. Those employers are not profitable to ERC companies due to the low percentage of the refund they retain as part of their fee which is unfortunate to the thousands of businesses still eligible.

Under the Recovery StartUp Business (RSB) program launched as part of COVID Legislation in late 2020, “a business or organization that began carrying on a trade or business after February 15, 2020, and had average annual gross receipts of $1 million or less for the three years preceding the quarter for which they are claiming the ERC” will qualify. And “your business does not need to specifically relate to pandemic relief or recovery efforts to be eligible.”

“To be eligible as a recovery startup business, you can’t be eligible for ERC under the full or partial suspension test or the gross receipts test. A recovery startup business can claim ERC only for the third and fourth quarters of 2021 and may claim a maximum of $50,000 of ERC per quarter.” This is likely where the rub with most ERC providers is – the maximum refund is limited.

Forensic Payroll is and always have provided ERC services for a $250 flat-fee per amendment + an hourly fee of $150 to perform the calculations. Most RSB’s only take 2 hours or less to calculate given the small number of employees.

What makes this better or worse than all the other ERC claims that were sent into the IRS? Since the employer “can’t be eligible for ERC under the full or partial suspension test or the gross receipts test” this is a black and white qualification. Unlike claims that rely on government orders for qualifying, RSB’s qualification is black and white but the best part is, you can use both the 3rd and 4th Quarter of 2021!

You should consider whether you need to coordinate with another part of your business, such as if you’re part of an aggregated group. For more information about aggregation rules, see Notice 2021-20, Section III.B. and Notice 2021-49, Section III.D. For more information about the Recovery Startup Business program for ERC, contact us at or your assigned Client Relationship Manager here at FPC.



Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top