Document Gathering Steps FAQ
Our process is why we are different from the other ERC processing services.
Every single case that we process is "pre-audited." This means we use the same process that an IRS auditor would use to verify your business' qualifications for the ERC credit.
The IRS ERC Processing Unit only has a limited time to work on each case.
They do not have the time for an extensive validation process.
While that may be good for your business on the front end, it could be a massive disaster if your business is audited in the future and found not to qualify or qualify for a lesser amount.
This could lead to huge penalties and perhaps even a referral to the Criminal Investigation Unit.
This is why for every client we provide documentation that is audit-ready.
Step 1: Completed ERC initial survey
The initial ERC survey is used to gather information about your company and gathers initial qualification factors. It will ask questions about the circumstances of your business and, where appropriate, will inform you of additional information necessary that was discovered as a response to a question.
Note: If you answer "Yes" to the question that your business was considered an "essential business," you will get a link at the bottom of the survey to the "Nominal Impact" survey. It is critical that you follow the link and complete this additional survey. As an" essential business" without proof that your business was "Nominally Impacted," your business will not qualify for the ERTC for any quarter that you do not qualify under the "Revenue Reduction" test.
Step 2: Engagement Letter and Signed IRS Form 8821
Our Engagement Letter must be signed in order to proceed with the document-gathering process. It explains the terms of service as well as the fee
disclosure.
Form 8821 is used as part of our Pre-Auditing process to verify information such as the following and to track the progress of your
application;
Verify Form 941s by pulling an IRS transcript for each quarter to ensure the transcripts are tied to the copies of Form 941s provided.
Verify the entity return filing by pulling IRS return transcripts to ensure the return transcript tie to the entity's annual returns
provided.
Our staff also uses Form 8821 to track the application progress and keep you informed of the progress.
Step 3: Quarterly Revenue Totals for the Years 2019, 2020, & 2021
Please provide the initial revenue totals broken down by quarter for 2019, 2020, and 2021. This will be used to assess your business' qualifications under the "Revenue Reduction" Test.
Note: As part of our Pre-Audit Process, this information will be verified against the annual tax returns provided, which will be further verified against the IRS return transcripts. Should there be a discrepancy, you will be asked to explain the disparity.
Should your business fail to qualify under the "Revenue Reduction" test for any eligible quarter, you will be promoted to complete Survey #2, "Impact of Shutdown Order and Nominal Impact."
Step 4: Copy of Forms 941 for all Quarters for 2020 and 2021
Please provide a copy of the filed form 941s for ALL quarters for 2020 and 2021.
Please Note: we need the most current version of Form 941, which means, if you have amended your Form 941 for a particular quarter previously, we would need a copy of the Form 941-X for that quarter.
Also Note: As part of our Pre-Audit Process, this information will be verified against the IRS transcript for each quarter. Should there be a discrepancy, you will be asked to explain the disparity.
If you are processing payroll through a PPO, we will need the equivalent of your company’s portion of the 941s for all quarters for 2020 and 2021.
Step 5: Copy of the Annual Financial Statements for the Years 2019, 2020, & 2021
Please provide a copy of the 2019, 2020, and 2021 annual financial statements.
Note: As part of our Pre-Audit Process, this information will be verified against the IRS Return transcripts. This information will be used to verify the quarterly revenue information provided and used to determine qualification under the "Revenue Reduction" test. Should there be a discrepancy, you will be asked to explain the disparity.
Step 6: Quarterly (not annual) Payroll in a CSV File for the Years 2019, 2020, & 2021
Please upload a copy of your quarterly payroll for 2019, 2020, and 2021. Please provide the file in a CSV format by quarter. Please provide the file in a CSV format. Please provide the payroll for March 13th 2020 through December 31st 2021.
Note that the first quarter of 2020 must be limited to the period March 13th through March 31st, 2020, ONLY. The ERTC Progam is limited this period for Q1 of 2020.
Please understand we need the payroll report to be broken down by employee and not just a summary of the payroll totals.
If possible, we would prefer the reports in either of the following formats in order of preference.
1) A CSV file of the payroll summary or equivalent by quarter for the years 2019, 2020, and 2021
Step 7: PPP Funding and Forgiveness Documents - Form 3508
If you have Paycheck Protection Program (PPP) forgiveness, we need a copy of the original PPP application and the SBA Form 3508 request for forgiveness.
Form 3508 Forgiveness Request is particularly important. In Form 3805 you would list how the forgiveness money was spent. As part of the breakdown, is
how much you spend on payroll, in addition to other allowable expenditures. If you do not provide Form 3508- Request for Forgiveness, we have to treat ALL of the forgiveness money as spent on payroll and reduce the qualifying wages. This would result in a lower ERC refund.
If your company did not participate in PPP, please provide a positive affirmation document (i.e., a Word document, my company did not participate in PPP). This avoids the question of did they participate and just did not provide the documentation, or they just did not participate.
If you are struggling with obtaining the PPP forgiveness amount, you can obtain this information at
https://projects.propublica.org/coronavirus/bailouts/search?q=&v=3. Note this information was obtained through the Freedom of Information Act from the
Small Business Administration (SBA). You will search for the information by entering your business name in the search box. The more unique your business
name is, the smaller the pool of business listings you will have to choose from. You will want to verify the listing is yours by looking at the unique
identities of your business (i.e., city and state). You will want to ensure the amount of the forgiveness appears correct. Please provide this document by
printing it as a PDF file.
Note: Based on your participation in other credit or benefit programs, we may be sending a request for other credit or benefit programs that you indicated in Survey # 1 that your company participated in such as R&D, WOTC, and other programs.
Step 8: Monthly Group Health Insurance Statements for the Periods Covering 03/13/2020 through 12/31/2021
The qualifying wages for ERC are limited to a maximum of $10,000 for each qualifying period. For ERC purposes, qualifying wages include employer-paid monthly health insurance premiums. It also consists of any post-payroll premiums paid by the employee because the amount of the health insurance premiums were grossed up (increased) the employees' gross wages.
If your company did not provide health insurance coverage, please provide a positive affirmation document (i.e., a Word document, my company did not provide health insurance coverage). This avoids the question of did they provide health insurance coverage and just did not provide the documentation, or they just did not provide health insurance coverage.
Please provide a breakdown of All health insurance premiums paid, if possible, broken down by quarter for 03/13/2020 through 12/31/2021.
Step 9: Copy of any Federal, State, or Local Governmental Orders Requiring Shutdown, Limitations, or Suspensions
As part of Survey #2, "Impact of Shutdown Order and Nominal Impact," you will indicate which governmental order(s) you were operating under. Based on your answers, a copy of the order(s) will be placed in your file.
As part of Survey #2, "Impact of Shutdown Order and Nominal Impact," you will indicate which governmental order(s) you were operating under and for what period(s) of time. Based on your answers, a copy of the order(s) will be placed in your file.
Note the survey is in two parts 1) Part One asks questions to determine the "Nominal Impact" on your business 2) Part 2 is initiated as a link in Part 1 and will require you to follow the link to Part 2; there you will indicate what governmental shutdown order(s) your business was operating under, for your state(s).
and for what period(s) of time. Completing this second part of the survey is critical because it allows us to qualify your business under the second criteria for the ERTC, the "Full or Partial Shutdown" order test. Without completing both parts of this survey, your business may miss out on substantially high ERTC refunds.
In the second part of Survey 2, you will be asked to identify the governmental orders you were operating under. It is critically important that you also indicate the period(s) of time that each order impacted your business. Without the period of time, your business WILL NOT qualify under the Full or Part Shutdown Order Test.
Note: As part of our Pre-Audit Process, this information will be verified against the answers provided in Survey #1. Should there be a discrepancy, you will be asked to explain the disparity.
Step 10: Quarterly Payroll in a CSV File for Greater than 50% Owners for the Years 2019, 2020, and 2021
While majority owners and related parties to the majority owner do not typically qualify for ERC, based on your particular circumstances, it may be possible that these wages do qualify for ERC.
Please provide a copy of your quarterly payroll for 2019, 2020, and 2021. Please provide the file in a CSV format. Please provide the payroll for March 13th 2020 through December 31st, 2021.
This information is also used to allocate other credit programs for which the qualifying wages must be reduced for any of these credits. The IRS provides no guidance on allocating these credit(s) back to qualifying wages. They just state they cannot be used for both credit programs. Therefore, we allocate the credits back to qualifying wages in the most beneficial manner possible, including allocating back to majority owners and related parties, which would typically be allowed to qualify for ERC.
Step 11: Business Tax Returns (Copy of 2019- 2021 Corporate, Partnership, Non-Profit Org, or Personal Return with Schedule C Filings)
Please provide a copy of the Entity or Non-Profit returns (Form 990 or 990-EZ for a Non-Profit) for the years 2019, 2020, and 2021. If your business is operated as a Sole Proprietorship and you had employees, (other than majority owners, and those related to the majority owner), please provide a copy of your personal returns including Schedule C for years 2019, 2020, and 2021. This will be used to assess your business' qualifications under the "Revenue Reduction" Test.
Organization Excluded from the Form 990 or Form 990-EZ filing requirements
What happens if my Tax Exempt Organization has not filed the required Form 990-EZs or Form 990s?
If your company is a non-profit organization and you believe your non-profit organization meets the exclusion from filing Form 990 or 990-EZ, please provide an attest statement indicating that "due to the exclusion rules in the Form 990 instructions, your organization is NOT required to file either Form 990 or 990-EZ".
Note: Please remove any password(s) before uploading the file(s). Just providing us with the password is not a good solution. We need the file to be in a format that can be opened (without a password) and printed. We provide a copy to the IRS as verification of the "Gross Receipts"
Note: As part of our PreAudit Process, this information will be used to verify the quarterly revenue provided, which will be further verified against the IRS return transcripts. Should there be a discrepancy, you will be asked to explain the disparity.
Step 12: Survey 2, Parts 1 and 2- Full or Partial Suspension Order and Nominal Impact
This survey is in two parts;
1) Part 1. You will be asked a series of questions to determine the impact on your business due to COVID, such as travel restrictions, operational impact, customer impact, and supply chain disruptions. Also, in Part 1, you will be asked to indicate what state(s) your business operates out of. Based on the state or states that your business operates in, you will be provided a link to Part 2 of the survey for each state that your business operates out of.
2) Part 2. In part 2, you will be asked to indicate the full or partial suspension by a government order(s) you were operating under AND, MORE IMPORTANTLY, the dates that your business was impacted by each separate full or partial suspension by a government order(s).
Note: Part 1 without Part 2 will not allow us to qualify your business under full or partial suspension by a government order(s) for two reasons;
1) Your business, your customer(s), and your suppliers must be subject to full or partial suspension by a government order(s) to qualify under full or partial suspension by government order(s); therefore, we MUST know the specific full or partial suspension by a government order(s) that your business was subject to.
2) The qualification under full or partial suspension by a government order(s) is limited to the time period that your business was subject to each separate full or partial suspension by a government order; therefore, it is absolutely critical that you provide the period of time that your business was subject to each separate full or partial suspension by a government order.
Note: Survey 2, Part 2, provides you with a comprehensive list of full or partial suspension by a government order(s) based on the state(s) that you indicated in Survey 2, Part 1, that your business operates out of. The list of full or partial suspension by a government order(s) is clickable; therefore, you can click the link and view each separate shutdown order if you need to determine which period of time the order covers and if it applies to you.