ERC Construction Companies Eligibility Available

ERC construction company eligibility

ERC Construction Impacted Industry

The recent pandemic left the entire globe in crisis by negatively impacting economies and businesses in nearly all industries. Among the majorly affected industries was the construction industry since all constructions project came to a halt as entire supply chains were disrupted and employees were forced to stay at home.

During this challenging time, the American congress introduced the Employee Retention Credit (ERC) — construction companies can claim ERC to get government financial support.

Almost every business suffering from issues like project delays, permit concerns, supply chain limitations, reduced crew sizes, or access limitations at job sites is eligible to claim ERC.
However, nearly all businesses fail to understand the ERC eligibility requirements properly.

These misconceptions — further fueled by outdated guidelines — have led several construction businesses that qualify for ERC to disqualify themselves from making an ERC claim.
Here is comprehensive information on everything construction businesses severely impacted by the pandemic need to know about ERC and its eligibility criteria.

Misconceptions About ERC for Construction Companies

There is a lot of wrong information regarding Employee Retention Credit. Here is a breakdown of some of the main misunderstandings about the eligibility for contracting companies.

A Business That Didn’t Shut Down During the Pandemic Is Ineligible To Claim ERC 

A construction business can submit an ERC claim if a state, local or federal government agency wholly or partially suspends its operations due to the pandemic. 

Some situations that meet the criteria for an ERC claim are business destabilization, partial shutdown, capacity limitation, reduction in employees, inability to acquire equipment, supply chain or shutdown, restrictions on the work site, and closure of some locations (not all) are some situations that meet the criteria for an ERC claim. 

Businesses must note that other than the decrease in gross revenue, a total or partial suspension.

A Business Is Ineligible for ERC If It Had Its PPP Loans Forgiven or Has Previously Made A PPP Loan Claim

Before the changes in CAA in 2021, businesses that had previously made a PPP loan claim or had canceled PPP loans were not eligible to apply for an ERC claim. However, congress eliminated the limitation on claims being limited to ERC or PPP in 2021’s CAA. Businesses can now file for both ERC and PPP.

A Company Is Not Eligible For an ERC Claim If It Experienced Growth during the Pandemic

ERC construction claim

The IRS continues to urge companies of all shapes and sizes to apply for an ERC claim. One of the primary reasons behind this is that allowing businesses to expand and flourish will help the economy grow and recover from the effects of the pandemic. 

Moreover, if your customers suffered due to the pandemic or you had to alter the activities of your business, you might be eligible for an ERC. Congress made several changes to the Employee Retention Credit in 2021 to make it available to more construction firms. 

With the money received from the credit through an ERC claim, you can hire additional workers, request a refund, and eliminate or decrease your payroll tax, among many other benefits.

If A Business’s Gross Receipts Didn’t Decrease By 50%, It Is Ineligible For an ERC Claim

Previously, only businesses that had suffered at least 50% or more of a decrease in their gross receipts were eligible for an ERC claim. However, thanks to the changes made by the CAA, if a business suffered a 20% decrease due to the pandemic, it’s now eligible to apply for an ERC claim.

If A Business Was Deemed Essential, It Is Not Eligible For ERC 

Many construction companies can falsely assume they are ineligible for ERC if they are classified as essential. However, the fact is that if a company can show that they have been more than minimally damaged by a directive issued by the government, it can also make an ERC claim.

How Can ERTC Services Help?

The misconceptions surrounding ERC discussed above are only a tiny chunk of the countless misconceptions regarding ERC that companies might have. This is why all construction companies need to contact the ERTC professionals at FTCO.

Our professionals can help debunk any misconceptions regarding ERC — builder’s financial relief and help streamline the entire application process to ensure you receive the maximum credit. We have helped several businesses get their ERC claims filed and accepted, and we will be more than happy to do the same for you. 

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