STPS

Does My Trucking Company Qualify for the ERC?

As a trucking company owner, you may be wondering if your business qualifies for the Employee Retention Credit (ERC), a tax credit established as part of the CARES Act to provide assistance to employers who kept their workers on payroll during the COVID pandemic. The answer is yes, as long as you had W-2 employees and experienced a significant decline in gross receipts due to the pandemic.

How to Qualify?

To qualify for the ERC, your trucking business must have been partially or fully shut down during the pandemic, which for truckers could simply mean that you ran less freight. Additionally, there are specific requirements regarding the decline in revenue that your business experienced:

For 2020 credits, you must have experienced a decline in revenue in 2020 (vs 2019) of at least 50%.

For 2021 credits, you must have experienced a decline in revenue in 2021 (vs 2019) of at least 20%.

Self-employed individuals (sole props) and trucking companies who paid their drivers via 1099 (subcontractors) unfortunately do not qualify for the ERC.

If your trucking business meets these qualifications, you could be eligible for a significant amount of credit – up to $28,000 per employee. The credit includes payroll tax credits for both wages and health insurance paid to employees, and there are two separate year periods of ERC available for 2020 and 2021. This means that your business could potentially qualify for credits for one or both years.

Submitting an ERC Application:

When submitting an ERC application, caution must be exercised. Many businesses and people are providing ERC services without the necessary credentials, which may have tax repercussions and lead to future IRS audits. These ERC scam companies will try to convince you that you are qualified for the ERC so they can make some money. They will be long gone by the time the IRS comes around with fines and penalties for you. Be careful! Contact your payroll service to verify you qualify before making any deals with companies that reach out to you about an ERC credit.

Where Do You Apply?

The application and information for ERC is available on the IRS website, but it is crucial to note that the tax laws specific to ERC have changed since the initial rollout, making the entire process quite confusing. To ensure that your application is correctly submitted and to avoid any potential delay or decline, it is best to seek professional guidance.

When applying for ERC, you will need to provide specific documents such as Form 941 for every quarter starting from the 2nd quarter of 2020 through the 3rd quarter of 2021, business tax returns for years 2019-2021, quarterly financials (P&L & Balance Sheet) for 2019-2021, PPP documents (application & forgiveness) if you received PPP, NYS-45 form for NY truckers, and IU-3/40 for Il truckers.

Bottom Line:

In summary, the ERC is a refundable payroll tax credit available to trucking companies that had W-2 employees and experienced a significant decline in gross receipts due to the COVID pandemic. The credit amount can be up to $28,000 per employee, and there are two separate year periods of ERC available for 2020 and 2021. However, it is crucial to seek the assistance of your payroll service to make sure you qualify to avoid any potential tax implications and future IRS audits.

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Written by Melisa Bush

With over 15 years of experience working with and for trucking companies, Melisa has no problem understanding the complications that come with trucking payroll and with navigating special circumstances.

Before coming to Superior Trucking Payroll Service, in 2011, Melisa worked for a trucking company with 50 trucks. She was the one who processed the driver’s miles and expenses.

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