Maybe the way to start thinking about this is by asking whether falling into the “essential business” category matters for ERC purposes for eligibility. And I think the general answer is “no, it doesn’t.”

For example, experiencing a “substantial decline in gross receipts” is the most straightforward method for qualifying. But is that “substantial decline” method only applicable to non-essential businesses? The answer is, of course, “no.” An essential business does not get disqualified from using the “substantial decline” method.

Another example: Do small employers averaging less than $1M in gross receipts qualify for a recovery startup business credit only if they are non-essential? The answer here also “no.” An essential business may be able to use recovery startup business ERCs.

Now think about an essential business. So almost by definition, an essential business probably won’t itself by subject to a full suspension gov’t order or any maybe even to a partial suspension gov’t order. But it could, which is why IRS Notice 2021-20 asks this question:

Question 11: If a governmental order requires non-essential businesses to suspend operations but allows essential businesses to continue operations, is an essential business considered to have a full or partial suspension of operations due to a governmental order?

You want to read the notice’s answer. The full answer is too long to stick in a comment. But the short answer is, yes under certain circumstances an essential business may be subject directly or indirectly to government orders that close a more than nominal part of business. And in those siuations, an essential business may qualify for ERC due to gov’t orders.

Yes, ERC is correct. Any magic phone number to call? No other way to find out status? Like the PPP loan, the intent of this was to give immediate relief to small businesses during the crisis. I think some people in the bureaucracy has lost sight of this.

We do know folks who’ve gotten ERC money.

Really, really, really slooooooow.

BTWI think yuo meant to type ERC, right?

Ahhh yes Jerry – you too have identified the reality of the Congress-IRS mumbo jumbo bait and switch runaround! I dont know of ANYONE who has filed a 941 and actually received any of the so-called credits. The employee retention credits provisions in teh IRC are obviously being intentionally manipulated in a fraudulent manner by IRS employees who are ignoring the law. The only effective and just response is swift prosecution and termination of the individuals responsible, as well as restitution and monetary damages awarded to those who have properly filed for the credits.
What say you Stephen?

To get the RSV ERC, one needed to have a small business… and then, probably, do the work of starting another business before 2021 ended.

So definitely a special situation. Thanks for participating in the discussion!

🙂

Thanks for the clarity, makes sense. It looks like a recovery startup business can possibly get the 4Q ERC, but a majority of businesses (such as mine) probably cannot since most of us are non-startup recovery businesses.

It sounds to me as if your son possibly started two businesses… Maybe. One that sells HD parts which he started in January 2020 (I don’t know what you mean by this. Sorry. Harley Davidson motorcycle parts is Google’s guess.) And another that does film production and media stuff which he started in mid-July 2021. Assuming that second venture counts as a trade or busines, he would qualify and get credits on the wages paid by the HD parts business.

Here’s the one problem with him getting recovery startup business credits on the film production venture: Is it really a trade or business? Or was it by the end of the third or fourth quarter. Seems like it might fail to have moved out of the startup phase. This longer blog post highlights the issues you guys would want to consider: https://evergreensmallbusiness.com/recovery-startup-business-employee-retention-credit-nine-awkward-questions/