BMW Dealer Employee Retention Credit

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Are you a BMW dealer? Do you own or operate a BMW auto dealership?

Wondering if your BMW dealership retail location qualifies for the Employee Retention Credit (ERC) due to the negative impact of COVID during 2020 and 2021? 

As a franchised BMW dealer, yes it does, and here is why.

Your BMW dealership qualifies for the employee retention tax credit (ERTC), depending on the mandated state government, county, city, or municipality restrictions placed on your BMW dealership location during the COVID pandemic. Even if your revenue increased during 2020 and 2021, vs. 2019, you still qualify.

Another key reason all BMW dealers will qualify for the employee retention credit is that BMW vehicles are manufactured by BMW Group, which faced major production shortages and BMW supply chain disruptions throughout the pandemic. BMW vehicle assembly plants ceased or slowed production during the pandemic, drastically reducing new inventory of BMW vehicles. 

BMW operations were further disrupted when they could not get automotive chips essential to producing BMW vehicles. Semiconductor factories shut down manufacturing operations globally caused by the pandemic. No automotive chips meant a huge delay and shortage of BMW vehicle units not being shipped to BMW dealers around the country. This caused BMW prices to soar. Vehicle shortages and supply chain issues have persisted throughout 2021, 2022, and 2023 for BMW.

If your BMW dealership was forced to close your showroom, not go on test drives, limit business capacity indoors, or reduce your hours of operation at your BMW retail location, this qualifies your BMW dealership location under the IRS Employee Retention Tax Credit (ERTC) “partial shutdown” rules. 

Meaning, your BMW dealership was still allowed to sell vehicles but was hindered by limited capacity. Even if your location did not have to be fully shutdown, you were mandated to close your BMW indoor showroom, and / or reduce your hours of operation at your BMW dealer location

Under the IRS ERC rules and regulations, your BMW business qualifies because your operations were disrupted due to government intervention by forcing you to reduce your business capacity. This qualifies your BMW dealer for the ERC Credit and tax refund from the start date of government restrictions, to the end date when all dealership capacity restrictions were lifted.

This is exciting news for all BMW dealers and owners to help offset and recoup costs from the negative impact of COVID on all of your dealership brands, and not just the BMW brand.

Many Financial and Accounting Professionals, CPAs, Financial Planners, Advisors, and Attorneys are unknowingly advising their BMW dealership clients wrong because they do not fully understand all the Employee Retention Credit tax guidelines as they relate to automobile car and truck dealerships, and other automotive-type businesses.

Schedule Your Free BMW Dealership Employee Retention Credit Consultation to see how much your BMW dealership location qualifies for the ERC Refund. There is still time. It can be retroactively claimed in 2023, 2024, and 2025, without having to pay a percentage of your hard-earned ERC Refund.

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Background on BMW Supply Chain Disruption Problems and Negative Impact on BMW Dealers

BMW has approximately 366 dealerships in the United States (USA).

When large amounts of BMW jobs, on both the manufacturing auto workers level and dealership environment level, faced layoffs, furloughs, and production shutdowns due to pandemic-driven disruptions, the White House stepped in to announce a plan to strengthen the resiliency of the automotive chip supply chain for major automakers like BMW and others.

Between the shipping supply chain being severely delayed globally, and the semiconductor computer chip BMW supply chain disruption, even though vehicle prices soared due to high demand and less supply, BMW dealerships were selling far less units of both new and used vehicles.

All caused by the COVID-19 pandemic, there were little to no new BMW cars and trucks being shipped to BMW dealerships. Thus, less vehicle units to sell. More car buying customers wanted to get a new BMW model vehicle, but couldn’t.

Any BMW dealer can easily show negative harm to their dealership by comparing the number of BMW vehicle units sold in 2019 for each quarter, and then compare the number of vehicle units sold for each quarter in 2020 and 2021. 2020 vs. 2019 and 2021 vs. 2019. According to IRS rules, if a business like an automotive BMW dealership can show a nominal impact to business operations, which is a decline of -10% or more, they would qualify for the employee retention credit.

To find out more about BMW vehicle brands, visit the BMW company website at BMW.com.

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BMW Employee Retention Credit For BMW Dealerships

BMW dealer owners are not alone. The car dealership industry continues to struggle with the economic impact of the COVID pandemic, high inflation, and a possible recession. BMW dealership owners are looking for ways to support their BMW employees and keep their businesses afloat, especially BMW car dealership owners who have a healthy investment in dealer fees and other expenses to recoup and earn a return from owning a BMW dealership.

The Employee Retention Credit (ERC) or Employee Retention Tax Credit (ERTC) was established by the Coronavirus Aid, Relief, and Economic Security (CARES) Act to help dealership and automotive type business employers retain their staff during economic hardship and negative impact due to COVID.

The Internal Revenue Service (IRS) ERC Tax Refund program is an important tool for BMW dealership owners, principals, and employers. The ERTC offers tax relief and provides a financial incentive to retain employees during the past economic disruption that occurred during 2020 and 2021. 

For BMW dealers, having a thorough understanding of the ERC credit and how it applies to their BMW dealership, owners and principals can ensure they take full advantage of this tax credit to support their BMW employees and locations.

Here is how BMW dealership owners and principals can take advantage of this valuable IRS tax credit to help their BMW location stay open with positive cash-flow to continue keeping their W-2 employees on the payroll.

Employee Retention Tax Credit For BMW Dealership Owners

The Employee Retention Credit for BMW dealerships is a tax credit available to eligible BMW dealerships and other automotive businesses. It provides dealership employers with a federal income tax credit of up to $26,000 per employee for wages paid during the pandemic years of 2020 and 2021. 

This tax incentive is intended to help reduce the financial burden of having retained BMW employees who may otherwise have been laid off or suspended due to the economic downturn caused by the pandemic.

The ERC applies to gross wages paid to your BMW dealer employees between March 13, 2020 and September 30, 2021, only for each quarter during this time frame that may have qualified. 3/13/20 to 9/30/21 time frame is for BMW dealers that were in existence prior to COVID. 

For BMW locations that opened after February 15, 2020, this dealership is considered a recovery start-up business, and may qualify through December 31, 2021 (12/31/21) of the 4th quarter.

Qualified BMW dealerships in 2020 can claim up to $5,000 maximum per employee for all of 2020. This is based on up to 50% of a BMW employee’s qualified wages. Eligible BMW employers must also have experienced either a full or partial shutdown due to orders, OR a capacity restriction from a governmental authority, OR have experienced a significant decline in gross receipts compared with the same quarter in 2019.

Almost every state forced BMW dealerships to close their indoor showrooms, and / or limited their business capacity. These periods of time occurred in which the state, county, and city your BMW dealership is located, will qualify the quarters and periods of time the capacity restrictions were imposed on your BMW location.

For all of 2020, BMW employers can access up to $5,000 maximum for eligible employees, and up to $7,000 per quarter, per employee, for eligible employees (for each quarter) in 2021. This means up to a combined $26,000 to $33,000 per employee depending on certain factors.

For BMW Dealerships, What Are The Eligibility Requirements For The Employee Retention Credit?

To qualify for the ERC, BMW dealerships must have experienced a full or partial suspension of their operations due to orders from a governmental authority limiting their ability to operate during specific periods in 2020 due to the pandemic.

Another way to qualify is if your BMW dealership had experienced a significant decline in gross receipts of at least 50% in 2020, or 20% in 2021, compared to the same calendar quarter in 2019, a pre-COVID year for your BMW dealer. 2020 vs. 2019 and 2021 vs. 2019, quarter by quarter. 

If you had less than 100 BMW employees paid in any given quarter in 2020 that qualifies, then all gross wages are counted, whether the employee was full-time or part-time.

In 2021, if your BMW dealership had less than 500 employees paid in any given quarter in 2021 that qualifies, then all gross wages are counted, whether the employee was full-time or part-time working for your BMW dealer.

The Internal Revenue Service (IRS) provides the following specific dealership examples to explain “full or partial closure orders” during a calendar quarter:

Social Distancing Through Capacity Restrictions at Your BMW Location

It appears that government orders restricting indoor showroom capacity or new car test-drives with potential car-buying customers at your BMW retail location has more than a nominal impact on the dealership’s business operations under the facts and circumstances.

BMW Dealership Showroom Is Closed Indoors, But Open Outdoors

Following mandated orders, the BMW dealership could operate only its outdoor area during this period. Since, under the circumstances, a significant portion of the BMW dealership’s business operations is having a sales person sit with a potential new car or truck buyer in their office, face-to-face, or doing a test drive of a new or used car, having been restricted by a government order, the BMW dealership’s business operations were partially suspended.

BMW Dealership New Car Test Drives Were Restricted

Due to a government order closing all dealerships, and similar automotive establishments for indoor face-to-face sales, a BMW dealership must close its showroom area.

BMW dealerships that qualify for the ERC can receive a tax refund cash incentive equal to a percentage of qualified gross wages paid:

  • Services and other gatherings were restricted by government orders; or
  • There was a significant decline in gross receipts for these BMW dealerships.

What If My BMW Dealership Received a Paycheck Protection Program (PPP) Loan?

Good news BMW dealership owners!

Due to recent changes in the ERC program, there are still ERC refund benefits available to organizations and BMW dealers that have previously received PPP Loans for their dealership.

The BMW PPP Loan (or loans), if your BMW location received two PPP loans, just needs to be correctly subtracted out from the date it was received against the qualified gross wages paid to your employees at BMW.

Besides BMW dealers, there are many more types of automotive dealerships that are eligible for the ERC credit. If your business serves any type of automotive business similar to BMW, you are probably eligible.

How BMW Dealers Can Claim The Employee Retention Tax Credit?

Once your BMW car dealership location has met all the eligibility requirements for the Employee Retention Credit, you can claim it on IRS Form 941-X

It seems simple enough, however, the ERC Credit is highly confusing and complex when dealing with the ERC program. 

See How Much Your BMW  Dealership Qualifies For The ERC Credit. Schedule Your Free BMW Dealer ERC Tax Refund Consultation For Expert Help In Claiming The ERTC Credit For Your BMW Dealership.

When dealing with IRS tax matters, federal payroll taxes, income taxes, tax returns and other matters before the IRS, it’s always best to have expert help to stay safe and compliant.

Additionally, you should keep all your BMW records and supporting documents in case the IRS has any questions. As a dealership employer, understanding and meeting the expectations of the Employee Retention Credit for BMW Dealerships is critical to taking advantage of the available tax credits.

Most importantly, BMW employers must accurately calculate the ERC Credit amount, provide the necessary documentation to support their ERC claim, and ensure they comply with all relevant laws. BMW employers are also responsible for keeping accurate records of their employee’s wages and hours worked.

You can also check out the detailed guide on How to Claim the Employee Retention Credit (ERC)?

Is The Employee Retention Tax Credit Only For BMW Dealerships?

No, the employee retention tax credit is not only for BMW dealerships. The Employee Retention Tax Credit (ERTC) was created as part of the Coronavirus Aid, Relief and Economic Security (CARES) Act to support business owners and BMW dealers who have been affected by the Coronavirus pandemic.

This tax credit is available to all businesses regardless of size or industry, so auto dealership employees are not the only ones eligible for this benefit. 

To qualify for these tax benefits, BMW employers must demonstrate that they experienced either a full or partial suspension of business operations due to governmental orders related to COVID-19 or had significant revenue losses due to the virus.

Besides BMW dealers, the ERC program is open to all types of businesses, including educational institutions, churches and other religious organizations, nonprofit organizations, and tribal governments.

Can A BMW Dealership Be Eligible For The ERC Credit And PPP Loan?

Yes! Even if your BMW dealership received an SBA Paycheck Protection Program (PPP) loan, an Economic Injury Disaster Loan (EIDL), you are still eligible under current IRS rules and regulations, provided certain requirements are met.

The BMW payroll expenses that were paid by PPP loans may not be considered eligible for ERC. You can not claim ERC on the same wages paid by PPP loan. The IRS doesn’t want double-dipping of the same exact wages paid with PPP month to your BMW employees.

Are Wages at BMW Eligible For The Employee Retention Tax Credit? 

Yes! As part of this relief measure, certain qualified wages are eligible for reimbursement via an employer’s payroll tax credits. All wages are included in qualified wages if they meet specific criteria as determined by the Internal Revenue Service (IRS).

If the W-2 wages are more than $20 a month and are subject to FICA then those tipped wages are eligible for ERTC.

What Is The BMW Full-Time or Part-Time Employee Count For ERC Eligibility for 2020 and 2021?

There is confusion because the IRS changed the criteria in 2021 for ERTC.

If you had less than 100 BMW employees paid in any given quarter in 2020 that qualifies, then all gross wages are counted, whether the employee was full-time or part-time.

In 2021, if your BMW dealership had less than 500 employees paid in any given quarter in 2021 that qualifies, then all gross wages are counted, whether the employee was full-time or part-time working for your BMW dealer.

Would It Be Better If I Combined The Gross Receipts From All Of My BMW Dealer Dealerships?

Dealerships in a group may claim the credit for gross receipts if the value of their gross receipts is equal to or greater than an aggregate sum that’s specified by regulators.

If the group meets the criteria, each individual entity may claim the credit, regardless of whether the group as a whole achieved the minimum threshold.

If the gross receipts present for the group as a whole do not meet the requirements, none of the entities may claim the credit even though some dealerships individually had a decline.

How Do I Compare My Q1 2020 Gross Receipts With My Q1 2019 Gross Receipts If I Didn’t Start My BMW Dealership Until Mid-Q2 2019?

If you opened your BMW dealer at the beginning of a quarter this year, you can calculate the gross receipts you have for the entire year. The first 3 months of the BMW opening in this year can be used as the basis for this calculation.

More Frequently Asked Questions (FAQs) About BMW Brand Dealers and Dealerships

Regarding BMW manufactured automotive vehicles, cars, trucks, and franchised BMW Dealerships, here is a list of other commonly asked questions about BMW Dealers.

• How many BMW dealers are in the USA?

• How many employees do BMW dealerships have?

• Who are the Top 10 volume BMW dealers in America for 2023?

• Who is the largest BMW dealer in the USA in 2023?

• Who are the Top 10 volume BMW dealers in California?

• Who is the largest BMW dealer in California?

• Who are the Top 10 volume BMW dealers in Texas?

• Who is the largest BMW dealer in Texas?

• How can I find a BMW dealer near me?

• How many BMW dealerships in the world?

• Who is the largest BMW dealer in the world?

• How many BMW dealerships in the world?

• How many employees does BMW have globally?

• Where can I find a list of all BMW dealerships?

Conclusion and Summary for BMW Dealers and Owners of BMW Dealerships

In conclusion, BMW auto dealerships have faced significant challenges due to the COVID pandemic, including government-mandated restrictions, production shortages, and supply chain disruptions. Despite these obstacles, there is a silver lining for BMW dealers: they qualify for the Employee Retention Credit (ERC). This tax credit offers financial relief to businesses negatively impacted by the pandemic, helping them retain employees and offset financial losses.

Franchised BMW dealers qualify for the ERC due to various factors: 

First, their operations were affected by government-imposed restrictions such as showroom closures, limitations on test drives, reduced indoor capacity, and shortened hours of operation. These restrictions classify the dealerships under the IRS Employee Retention Tax Credit “partial shutdown” rules, which encompass businesses that faced operational hindrances but were not required to fully shut down.

Second, BMW dealerships experienced significant inventory shortages due to production and supply chain disruptions. BMW faced considerable challenges during the pandemic, including factory shutdowns and a scarcity of essential automotive chips. These factors resulted in a limited supply of new BMW vehicles and skyrocketing prices, further exacerbating the impact on dealerships.

It is crucial for BMW dealers and owners to understand that they qualify for the ERC, regardless of their revenue trends during 2020 and 2021. This tax credit offers valuable support in mitigating the adverse effects of the pandemic on dealership operations, even if those operations were not completely shut down.

Unfortunately, many financial professionals, CPAs, and attorneys may not be fully aware of the nuances of the Employee Retention Credit as it applies to automotive businesses. Therefore, it is essential for BMW dealers to seek guidance from experts with specific knowledge of the ERC tax guidelines to ensure they receive the full benefits to which they are entitled.

In summary, BMW auto dealerships have faced unprecedented challenges during the COVID pandemic. However, the Employee Retention Credit offers a valuable opportunity to offset losses and help dealerships recover. By understanding the qualifications and seeking appropriate guidance, BMW dealers can maximize this employee retention tax credit and emerge stronger as they navigate the post-pandemic landscape. Go BMW.

BMW Dealers and Owners: Get Help on How to Apply for the Employee Retention Tax Credit (ERC / ERTC): Claim Up To a $26,000 to $33,000 Refund Per Employee for Your BMW Car Dealership

Disaster Loan Advisors can assist your BMW dealership with the complex and confusing Employee Retention Credit (ERC) and Employee Retention Tax Credit (ERTC) program. 

Depending on eligibility, BMW owners can receive up to $26,000 to $33,000 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 BMW dealership.

Schedule Your Free Employee Retention Credit BMW Dealer Consultation to see how much of an employee retention tax credit your BMW location qualifies for.

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