Arizona Attorneys, Lawyers, and Law Firms Employee Retention Credit in AZ (2024 updates)

January 21, 2024
Cover Image Credit: 123RF.com / Ammentorp / Disaster Loan Advisors.

Arizona lawyers, law firms, attorneys and legal professionals in AZ that were economically harmed during the pandemic will qualify for the employee retention tax credit. With Arizona Courts shutdown and then limited, legal businesses suffered during 2020 and 2021 in AZ.

In Arizona, there are currently 11,400 Arizona Lawyers employed according to the U.S. Bureau of Labor Statistics (BLS). This is a 6.00% change from the previous year. The average Arizona Attorney salary is $126,600 in annual wages in AZ.

The State Bar of Arizona regulates and licenses attorneys and lawyers in AZ.

Other Arizona Attorney statistics from the American Bar Association (ABA) estimate 15,805 Lawyers certified in AZ.

All the State of Arizona legal occupations employ about 23,740 legal professionals that earn an average of $91,000 per year in AZ wages.

Did your Arizona CPA, accountant, tax expert, or financial planner tell you that your Arizona law practice does not qualify for the employee retention credit in AZ? They may be completely wrong. Don’t rely on the information provided by Arizona professionals who may be unaware of all the detailed IRS guidelines that qualify for the ERC in Arizona.

Key ERC Credit Takeaways You Will Learn:

  • AZ Law Firms Eligible: Legal professionals in AZ can claim the Employee Retention Credit.
  • Significant Tax Incentive: The ERC provides substantial aid to maintain workforces.
  • Renewed by CAA: The credit was extended by the Consolidated Appropriations Act.
  • Claim Retroactively: Law firms can claim the ERC even after closing or selling.
  • Avoid Scams: Be cautious of ERC deduction scams and seek expert guidance.

See Important 2024 Employee Retention Tax Credit Deadline Information at the Bottom of This Article.

Arizona Employee Retention Tax Credit for Lawyers and Attorneys in AZ

Arizona attorneys, law offices, lawyers, and other specialized legal professionals in AZ are eligible to claim the Employee Retention Credit (ERC). They can receive up to 50% of their qualified wages paid between March 12th, 2020, and December 31st, 2020, in the form of a refundable tax credit from the IRS.

Arizona legal businesses that were established before February 15th, 2020, can receive a refundable tax credit amounting to 70% of qualified salaries and wages paid between January 1st, 2021, and September 30th, 2021. For AZ law firms created or acquired after that date (referred to as a Recovery Start up), they are eligible for employee wage reimbursement up until December 31st, 2021.

The employee retention credit may be retroactively claimed for 2020 and 2021, through 2023, 2024, and 2025 for your legal practice or firm in Arizona.

AZ Employee Retention Credit, How it Works in Arizona

With the Arizona requirements and amount of the ERTC tax credits continually changing with the ERC program, AZ attorneys, lawyers, and law firm principals and partners may find it difficult to understand if they qualify and how much they can claim. 

To maximize the benefits from this Arizona employee retention tax credit, you must understand which quarters are eligible as well as which employees, wages, and payments meet the criteria for receiving the tax credit.

Arizona Employee Retention Credit Eligibility Requirements for Law Firms, Attorneys, and Lawyers in AZ

Arizona legal firms can take advantage of employee retention credit in several ways.

For a Arizona law office to be eligible for the program, it must have gone through an entire or partial closure because of COVID-19 government regulations or any other kind of government-mandated shut down during certain periods in either 2020 or 2021 as a result of this global pandemic.

A Arizona law firm must demonstrate that it has had either a 2020 quarter with gross receipts at least 50% lower than the same quarter in 2019, or in 2021, quarters with 20% fewer gross receipts compared to the corresponding quarters of 2019. Each three-month period of 2020 and 2021 should be compared to its equivalent month period in 2019.

In Arizona, did your law firm experience any of these?

Full or Partial Shutdowns in AZ

If your legal office was fully or partially shut down for even a few days due to COVID-19, it would qualify your Arizona law firm for the ERC tax credit.

Arizona Shuttered Courts 

Maybe your AZ office is not in the county where the courtrooms are, and the local government courtrooms and legal buildings were closed mostly. In this case, you were not able to proactively pursue cases. Therefore, the opposing party or company being sued had zero incentive to settle. This is a valid example for you to qualify to receive the tax credit in Arizona.

Limitations on Jury Trials in Arizona

Due to the shutdown in court operations, the number of jury trials is greatly reduced. This means that even if your legal office is not in the area of the closed courtrooms, you can still be eligible for the tax credit.

No In-Person Arizona Depositions

The inability to conduct in-person depositions has also led to decreased civil court proceedings. Therefore, you may qualify for the tax credit if your law firm has been affected by this limitation.

No In-Person Client Meetings in AZ

In some cases, due to the pandemic, AZ attorneys were not able to meet with their clients in person. This was an obstacle for Arizona attorneys in defending their cases. If your AZ legal office dealt with this situation and had a decrease in revenue due to it, you may be eligible for the ERC tax credit.

Some Arizona law firms may have had to reduce their clients’ services due to COVID-19, such as not offering in-person legal consultations due to travel restrictions or self-quarantine requirements. If that is the case for you, your legal consultation may be eligible for the ERC tax credit in Arizona.

Accurately calculating the Arizona employee retention credit for your firm requires attention to detail, especially when it comes to determining your total gross wages paid during a quarter. Without accurately calculating this figure, you won’t be able to receive the full benefit of this tax credit. Therefore, having a comprehensive understanding of how best to calculate these figures is essential.

Although the process of applying for the Arizona ERTC has changed a bit, there’s still time to claim your ERC tax refund. Remember that this window won’t be open forever – it’ll shut in 2023, 2024, and 2025 based on 2020-2021 quarter evaluations. Don’t worry about running out of funds either. These refunds are calculated using each business’ qualifications and financials. The only way you can miss out is by not filing prior to the given deadlines for your practice in Arizona.

Conclusion and Summary for Arizona Attorneys, Lawyers, and Law Firms Employee Retention Credit in AZ

To ensure your Arizona Law Firm is in compliance with the Employee Retention Credit, it’s critical to keep all original records, including paystubs, W-2s, and other documents related to legal employee wages. Additionally, any government shutdown executive orders or restrictions in Arizona should be documented.

By understanding the rules of the employee retention credit, law firms, attorneys, and lawyers in Arizona can make sure they’re getting all the financial relief tax benefits due to them. The ERTC provides an opportunity for legal businesses affected by COVID-19 in Arizona to recoup some financial losses.

Disaster Loan Advisors™ can assist your law business with the complex and confusing Employee Retention Credit (ERC) and Employee Retention Tax Credit (ERTC) program, without you having to sacrifice an excessive percentage of your hard-earned ERC refund. 

DLA doesn’t charge a percent like many companies do. Our flat fee structure is fair and reasonable based on the amount of work involved. Keep More of Your Refund™ 

Depending on eligibility, legal professionals and law firm principals and partners can receive up to $26,000 per employee based on the number of W2 employees you had on the payroll in 2020 and 2021.

The ERC / ERTC Program is a valuable IRS tax credit you can claim for your Arizona law practice.

Schedule Your Free Arizona Employee Retention Credit Consultation to see what amount of employee retention credit tax refund you qualify for your legal practice in Arizona.

ERC Deadline Urgency in 2024

April 15, 2024 Deadline for the 2020 ERC Tax Year

The deadline is coming up for the final opportunity to retroactively claim your business Employee Retention Credit for the past 2020 tax year. With the April 15, 2024 deadline fast approaching, we urge you; don’t let this final chance pass!

While not all businesses will qualify, as it depends on multiple factors per IRS Rules and Guidelines, you might be leaving significant financial relief on the table from prior COVID impact to your business during the past 2020 and 2021 business operation years.

Last year, in September 2023, the IRS temporarily paused processing ERC Claims for the remainder of last year. We at Disaster Loan Advisors (DLA) predicted this over one year ago when we made this ERC video warning business owners. See the ten-minute mark of the video for details. 

TAKE ACTION NOW IN 2024

Even though the IRS has temporarily paused processing, you will still want to check eligibility and file now (if you qualify) because once the IRS will resume processing, ERC tax credit claims are processed in the order they are received.

If you haven’t previously filed for the ERC Credit, it is worth scheduling a phone call to at least explore your possible eligibility from both the past 2020 and 2021 business tax years. Contact us today for a deep-dive analysis to determine if your business qualifies one or more quarters from the 2020 and / or 2021 tax years.

Mark Monroe
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