The American Dental Association recently spoke with Allen Schiff, president of the Academy of Dental CPAs and owner of Schiff & Associates, to provide more information on the Employee Retention Credit for dental practices.
Seven things to know:
1. The Employee Retention Credit was established as part of the Coronavirus Aid, Relief and Economic Security Act. It is a refundable tax credit given by Congress to businesses that paid employees while being shut down due to COVID-19 or had significant declines in gross receipts between March 13, 2020, and Dec. 31, 2021.
2. The ADA said March 20 that the credit has been the subject of fraud and that the Internal Revenue Service has warned employers to be wary of third parties advising businesses to claim the credit when they may not qualify.
3. Dental practices can receive a tax credit of up to $5,000 per employee for the period between March 13 and Dec. 31, 2020, and $7,000 per quarter and per employee between the period of Jan. 1 and Sept. 30, 2021.
4. Eligible dental practices can claim the credit on IRS form 941-X.
5. Dental practices must meet several criteria to be eligible for the credit. As part of this criteria, dental practices must have experienced a significant decline in gross receipts during any quarter of 2020 or 2021 compared to the same quarter in 2019. A decline of at least 50 percent is required for 2020 and a decline of at least 20 percent is required for 2021. The practice also must have been fully or partially suspended due to a government order related to COVID-19 during the calendar quarter of 2020 or 2021.
6. Mr. Schiff told the ADA that Schiff & Associates processed 81 credit claims for 2020 that amounted to $2,991,855 in refunds, an average of $36,936 per dental practice. The company processed 34 ERC claims for 2021 that amounted to $1,967,698 in refunds, an average of $57,843 per dental practice.
7. Mr. Schiff said he has seen dental practices that have inaccurately calculated eligible wages, failed to meet eligibility requirements or had insufficient documentation that resulted in inaccurate or unsupported claims, which can lead to audits, penalties or other consequences.