The years-long COVID-19 pandemic had an impact on just about every aspect of society, and the entertainment industry was certainly no exception. Throughout 2020, most productions were shut down and delayed. When crews finally returned to set, it was under strict government-guided restrictions and guidelines. Smaller crews, new techniques, more oversight … the pandemic affected the entire production pipeline. If you had a production during this time, it is highly likely that it was affected by these restrictions. However, there is potentially some help coming your way from the world’s leading global information services company.
The good news
If you were even partially affected by things like social distance guidelines, travel restrictions, indoor capacity limits, venues closed, or segments of business shut down, there might be some money available to you. Your organization may be able to leverage the Employee Retention Credit to receive a tax refund of up to $26,000 per employee based on COVID-19 government restrictions and their impact on your business—whether you received PPP or other stimulus funds or not. ERC is a refundable tax credit based on qualified wages and healthcare costs, running from Q2 of 2020 to Q3 of 2021. If you qualify for this refundable tax credit under the ERC program, you could receive a cash benefit, regardless of your tax liability.
How does it work?
To maximize this potential benefit and make the process of getting you paid as simple as possible, Experian Employer Services is providing assistance. To start, Experian will send over a simple two-page letter of intent that kicks off a process that typically takes about 8-12 weeks. Experian will then provide their findings. Once that’s done, Cast & Crew will complete an Amended 941 form for the eligible quarters. Finally, the IRS will issue checks by mail.
Running the numbers
For clarity, a “full-time employee” is defined as someone who works an average of at least 30 hours per week or 130 hours per month. As the ability to capture ERC is based largely on an organization’s pre-pandemic, full-time employee headcounts, Experian Employer Services looks to 2019 as a baseline year when determining how much money may be due. Each organization is placed into one of three buckets:
- 0-100 full-time employees = Credit in 2020 and 2021
- 100-500 full-time employees = Credit in 2021 only
And there may be credit opportunities regardless of whether your employees were fully working during the specified eligibility period.
How to qualify
If you’re hoping to qualify, there are two questions to ask yourself, both using 2019 as a basis for comparison:
First, did you have a sizeable reduction in gross receipts for any quarter when compared to the same quarter in 2019 (that is, 50% gross reduction in a 2020 quarter versus the same quarter in 2019 or 20% gross reduction in a 2021 quarter versus the same quarter in 2019)? If so, you qualify for any quarter based on the gross receipts’ reduction, and you’ll automatically get credit for that quarter and the entire one thereafter.
Second, were your operations fully or partially suspended due to government orders related to COVID-19 (such as limiting travel and group meetings)? If so, you may be in good shape.
The maximum available credit is $26k per employee, but breaks down as follows:
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Period
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Credit value
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2020 Q2 – Q4
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50% of $10k in qualified wages for a max credit of $5k per employee
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2021 Q1
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70% of $10k in qualified wages for a max credit of $7k per employee
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2021 Q2
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70% of $10k in qualified wages for a max credit of $7k per employee
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2021 Q3
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70% of $10k in qualified wages for a max credit of $7k per employee
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2021 Q4
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Retroactively repealed by the Infrastructure Bill
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Maximum available credit: $26k per employee
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Of course, you might qualify based on both tests in different quarters, but production companies are typically waved ahead across the entire program. And again, it’s worth remembering that companies can be eligible regardless of whether they received PPP or other stimulus funds. There are, of course, some excluded wages, such as those paid to owners and relatives of owners and those paid using PPP funds. For some insight into these wages, read this breakdown.
Deadlines and details
While it’s always better to act promptly, companies that meet the ERC eligibility requirements can claim the tax credit up to three years after filing a tax return, or up to two years after paying (whichever comes later). Per the instructions on the Form 941-X (Adjusted Employer’s Quarterly Federal Tax Return or Claim for Refund), the period of limitations to amend the form begins on April 15 of the year succeeding the one in which the form was filed. So, you can file for 2020’s unclaimed credits until April 15, 2024, and for 2021 until April 15, 2025. And while the IRS doesn’t provide a timeframe, it is estimated that businesses will receive their funds about nine months from the date of filing.
We’re here to help
Experian Employer Services will help you maximize the ERC benefit while reducing the resources you must dedicate to it. For more, read this overview. You can also reach out to Don Johnson from Experian Employer Services with any questions or concerns:
Don.Johnson@Experian.com | 813-323-6461
