The automotive industry has been hit hard by the pandemic, with many car dealerships facing unprecedented challenges. Good news. The ERC Tax Refund, or Employee Retention Credit, can offer relief for your employees affected by COVID from past 2020 and 2021 tax years. Your car dealership can use this refund to alleviate the negative financial effects of COVID and recover some of the related expenses.
Car dealers who are recovering from the COVID-19 pandemic can still claim the Employee Retention Credit (ERC) Tax Refund retroactively in 2023, 2024 and 2025. To qualify, car dealerships must meet certain criteria based on the quarters of 2020 and 2021 and calculate a percentage of prior payroll paid to employees during that period.
It is important to note that your car dealership could have qualified for the ERTC even if it was only partially shut down. If someone advised you that your auto dealership business does not qualify, they might not have a full understanding of the current guidelines for the ERTC.
In this regard, Internal Revenue Service IRS ERC rules could help us understand it better. They stated that a crucial factor in determining eligibility for the tax credit is the extent to which state or local governments restricted the dealership’s location during the pandemic. If the government imposed limitations on the dealership’s business capacity from the date they were mandated until they were entirely lifted, your car dealership might qualify for the ERC credit and tax refund.
To find out if your dealership business qualifies for a tax refund called Employee Retention Credit (ERC), read this detailed Quick Start Guide. We will explain the eligibility requirements, application process and provide useful resources. By the end of the guide, you will understand everything about the Employee Retention Credit for automotive dealerships and how to get the most out of this tax benefit.
Key ERC Credit Takeaways You Will Learn:
- ERC for Dealerships: Understand the basics and functioning of the Employee Retention Credit specific to automotive dealerships.
- Eligibility for Dealerships: Learn the essential eligibility requirements for automotive dealerships to claim the Employee Retention Credit.
- Calculating ERC for Dealerships: Master the procedure to accurately compute your dealership’s Employee Retention Credit.
- Claiming & Utilizing ERC: Get insights into claiming the ERC and how to best utilize it to support your dealership’s finances.
- Avoiding Common Mistakes: Learn to avoid common errors in the ERC claim process, ensuring a successful application and maximum credit.
See Important 2024 Employee Retention Tax Credit Deadline Information at the Bottom of This Article.
What is the Employee Retention Credit For Automotive Dealers?
The Employee Retention Credit (ERC) allows qualifying auto dealerships, car dealers, and retail businesses to receive money back on gross wages paid and some employment taxes by claiming a refundable payroll tax credit equal to 50% of qualified gross wages salaries paid between March 12, 2020, and December 31, 2020.
For 2021, businesses that existed before February 15, 2020, can receive a refundable tax credit of 70% on qualified gross wages and salaries paid between January 1, 2021, and September 30, 2021. However, dealerships that were started or acquired after February 15, 2020 (known as a Recovery Start-up in IRS ERC terms) can claim employee wages through December 31, 2021.
The Employee Retention Credit (ERC) was introduced under the CARES Act to help small and midsize businesses, such as auto dealerships, get back on their feet and protect their employees during the pandemic. Its purpose was to incentivize employers to retain staff and avoid laying them off. Several modifications have been made to the ERC since 2020.
Under the Infrastructure Investment and Jobs Act, it applies only to wages paid before October 1, 2021, with the exception of recovery startup businesses working towards recovery, which have until January 1, 2022, to claim the employee retention credit (ERC).
How Does the Employee Retention Credit Work For Automotive Dealerships?
Because the eligibility requirements and credit amounts for the ERC program have changed several times since its launch, car dealers may find it challenging to determine if they meet the requirements and how much credit they can receive for a particular period.
TIP: To fully benefit from this tax credit, it’s important to know how to determine which quarters are eligible and which employees, wages, and payments qualify for the credit while ensuring safety. Or you can book a free consultation with our experts to determine the maximum qualified wages for the same calendar quarters of 2020 and 2021.
Employers had to follow certain steps to claim the Employee Retention Tax Credit. They needed to check if they were eligible, calculate the credit amount for each pay period, deduct it from their payroll tax deposit, and report it on IRS Form 941-X. The 941-X is an amended version of the original Employer’s Quarterly Federal Tax Return (Form 941) and is usually due within 30 days of the end of the quarter.
The process for claiming credit has changed now that the program for Form 7200 (which was used for ERC) has ended. Previously, if the credit was more than the tax deposit, the employer could use Form 7200 to request an advance payment and receive a refund for the excess amount.
Even though the Employee Retention Tax Credit program has ended, you can still apply for the credit for qualifying quarters up to three years after the program’s end date. This applies to employers who were granted a Paycheck Protection Program (PPP) loan.
For quarters ending on or after September 30, 2021, the process to claim the credit may differ. Dealership owners must confirm the specific requirements for their situation. To receive the tax credit, owners must provide documentation proving that the pandemic negatively affected their business, such as revenue or capacity restrictions, and that they continued to pay their employees during that time. Accurate records of employee payrolls, including pay periods and qualified wages paid, must be kept by owners.
Note: The information contained in this article is for educational purposes only and is not intended as tax advice. Please consult an ERC specialist or tax advisor to discuss the specifics of your situation.
Is My Automotive Dealership Eligible for the Employee Retention Credit? Eligibility Requirements For Automotive Dealerships
Yes, your automotive dealership is eligible for the Employee Retention Credit (ERC) if it meets specific requirements:
1. Full or Partial Suspension of Operations
Dealerships can qualify in one of two ways. The first is if they experienced a full or partial shutdown due to COVID-19 government regulations or any other government-mandated shutdown of operations during specific periods in 2020 or 2021 because of the pandemic. To determine if a dealership is partially suspended, tests are required to determine if the suspended activities make up more than a “nominal” part of the business.
The IRS defines nominal as less than 10% of the total gross receipts of business operations or the total hours of service performed by all employees in Questions 11 and 18 of IRS Notice 2021-20, which provides guidance on the Employee Retention Credit under Section 2301 of the Coronavirus Aid, Relief, and Economic Security Act.
The notice gives an example of a scenario where suppliers for a qualified employer are unable to provide necessary goods because of a complete or partial shutdown that affects the employer’s operations. Due to the current shortage of semiconductor chips and recent shutdowns of manufacturer facilities caused by COVID-19, the supply chain for new vehicles has been severely impacted.
Due to disruptions in supply chains, many dealerships have limited new vehicle inventory and are also experiencing delays in completing repair orders due to parts shortages, which can be considered a partial suspension.
2. Significant Decline in Gross Receipts
To qualify for the ERC, a dealership must have experienced a notable decrease in gross receipts compared to either 2019, 2020, or 2021. The decrease is considered significant if it exceeds 50% in 2020 for the same quarter in 2019 or 20% in 2021 for the same quarter in 2019. This means you need to compare the corresponding quarters of 2019, 2020, and 2021.
Example: If a dealership’s gross receipts were $100,000 in the 2nd quarter of 2019 and dropped to $50,000 in the same quarter of 2020, it qualifies as a significant decline. Likewise, if the gross receipts in the same quarter of 2021 were $80,000, it would also meet the significant decline criteria.
Examples of gross receipts include:
| Type of Gross Receipts | Examples |
| Total sales and revenue received | Revenue from sales of products or services |
| Investment proceeds | Proceeds from the sale of stocks or other investments |
| Interest | Interest earned on savings accounts or loans |
| Royalties and annuities | Royalties received for the use of intellectual property or annuities received as a regular income stream |
| Rents | Rent received for the use of property |
| Dividends | Dividends received from investments in stocks or mutual funds |
Note: You can claim the credit on your payroll tax return, and you have up to three years from the date of filing to amend it. For instance, if you’re a Houston dealership, and the state government order partially shut down your business, and you couldn’t sell vehicles during Q2 of 2020, and you filed your quarterly payroll tax return in July 2020, you have until July 2023 to amend your return and claim the credit.
To determine the ERC in case of a significant decline in gross receipts, one must consider the aggregation rules. These rules require members of a controlled group to calculate the ERC as a single employer since this was established under the CARES Act for the ERC.
The special controlled group classification includes three categories of aggregated companies as shown in this table:
| Category of Aggregated Companies | Description |
| Parent-Subsidiary Controlled Groups | A single entity owns at least 50% of all the entities in the group. |
| Brother-Sister Controlled Groups | Each entity in the group has 5 or fewer individuals owning at least 80% of it and possessing at least 50% of the voting power. |
| Combined Groups of Corporations | A combination of brother-sister and parent-subsidiary companies. |
The aggregation rules apply to entities in any of the mentioned categories. This means that when determining eligibility and qualified wages for the ERC, all group members will be considered as one employer. It’s important to note that the businesses don’t have to be related to each other, but if they have the same ownership, they will be combined for the ERC determination. To qualify as an eligible employer due to a decline in gross receipts, the employer must take into account the gross receipts of all members of the group. If the aggregated group has not experienced a significant decline in gross receipts, then no group member can claim the ERC based on that reason.
3. Number of Employees
As a dealership owner, if you paid wages to fewer than 100 employees in any quarter of 2020 (or 500 employees or less in 2021), you can count those payroll gross wage numbers and salaries towards the ERC tax credit. This applies to both full-time and part-time employees.
The Internal Revenue Service (IRS) has provided conditions to help dealership owners qualify for the Employee Retention Credit during COVID-19, which can be used for the full-time or partial closure of their business.
They are as follows:
1. Capacity Restrictions at Your Car Dealership or Garage to Ensure Social Distancing
If you had to reduce the number of seats in your dealership to comply with social distancing rules during the COVID-19 pandemic, you might qualify for the Employee Retention Credit. Because without viewing cars’ inventory, customers can’t make a purchasing decision.
2. Your Dealership Is Opened but With NO permission to meet the customer
You may qualify for the Employee Retention Credit if your dealership is unable to offer customer service due to an order issued by the local government.
3. Your Dealership Office is completely Closed
It’s also possible to qualify for the Employee Retention Credit if your dealership had to be completely closed due to government orders issued during COVID-19.
Dealerships that qualify for ERC guidelines may be eligible for a tax refund of a certain percentage of their qualified wage payments. Eligibility applies to dealerships that were either limited by government orders or experienced a decline in gross receipts.
How to Calculate the Employee Retention Credit For Car Dealerships?
Before calculating the employee retention credit for car dealerships, it is crucial to determine the total gross wages paid in a quarter. Without this information, it is not possible to accurately calculate the credit amount.
If a dealership is eligible for the employee retention credit, they can take into account three types of compensation when calculating the credit: wages paid, FICA-tax compensation, and certain qualified health insurance premiums expenses. However, in order to be one of the eligible employers for Employee Retention Credit, these wages must have been paid to employees who were still working for the company between March 12, 2020, and September 30, 2021.
Note: It is important to remember that PPP loan-funded wage expenses should not be factored in when calculating qualifying wages. Therefore, it is more advantageous to allocate PPP loans towards non-wage expenses or wages that would not result in employee retention credits.
Here are the payment amounts that the government would provide for the years 2020 and 2021.
| Year | Maximum Amount of Qualified Wages per Employee | Percentage of Reimbursement | Potential Refund per Employee |
| 2020 | $10,000 per quarter | 50% | Up to $5,000 per quarter |
| 2021 | $10,000 per quarter | 70% | Up to $7,000 per quarter |
This means that the total payroll expenses for each employee could add up to $26,000 when combining the costs for both the years 2020 and 2021.
Want to calculate ERC? Don’t forget to read our detailed guide on ERC calculations here.
How Can Dealerships Claim the Employee Retention Credit?
The application process has been modified a bit, but you can still apply. However, it’s important not to delay as the deadline for eligibility varies between 2023, 2024, and 2025 depending on your business’s previous quarters from 2020 and 2021. The availability of funds is not an issue because the tax refund is calculated based on your business’s qualifications. The only way you can lose out on the ERTC is by failing to apply before the deadlines.
To claim the ERC, eligible dealerships may utilize various methods that have been established by the IRS. The most frequently used option is to complete and file a paper version of Form 941-X for the eligible quarters. Please note that this form cannot be submitted electronically and must be mailed to the IRS.
Note: If your dealership received SBA PPP loan funds during Rounds 1 or 2, it’s recommended that you speak with an ERC Tax Refund Consultant to ensure proper deduction according to IRS guidelines. This will help to maximize your employee retention credit tax refund benefits.
How Can Dealership Owners Use the Employee Retention Credit to Their Advantage?
Dealership owners should consider using the Employee Retention Credit to manage payroll costs. However, they need to remember that they must claim it on Form 941-X, and there are specific criteria for qualifying. Car dealers also need to keep in mind how their PPP loan funds and other tax credits may affect the ERC. The whole process can be confusing for most dealership business owners, but Disaster Loan Advisors can assist and simplify the process of claiming the ERC credit.
Here are some ways you can use your credit:
Consider utilizing the Employee Retention Credit to support your dealership
The ERC is a tax credit that can assist in covering payroll costs after they have been incurred. You can use the credit to offset expenses such as employee wages and health benefits that were paid during the covered period. This credit not only helps with expenses but can also result in tax savings.
Employee Training and Development
You can use the credit to train and develop your employees, which can lead to higher skill levels, better retention of top talent, and improve service quality at your dealership. For example, if you are a Toyota dealership, you can use the credit to develop staff who are knowledgeable and experienced in servicing Toyota vehicles.
Pay Bonuses or Incentive Payments to the Employees Worked Hard During the Pandemic
In order to make your employees loyal and motivated, you can use the ERC credit to pay bonuses or incentive payments. This will show your employees you value their hard work and dedication during the pandemic. Additionally, this can be used to attract new talent and retain current employees.
Leverage ERC to Cover Other Business Expenses or Development
The car dealership is no longer limited to using the ERC for payroll expenses. There are many other expenses that could be covered. For example, you can use the credit to purchase new equipment, upgrade your website and online presence, develop a marketing and advertising campaign, or even pay for professional services relating to accounting, legal, or other business-related matters.
Good News for Dealership Owners – You Have the Freedom to use ERC Tax Refund
Utilizing the Employee Retention Credit is an effective method to decrease payroll expenses and enable your dealership’s growth. You can use the ERC tax refund without any constraints on its allocation, meaning you can choose to use the funds towards whatever expenses your dealership may need. The choice is yours!
Case Study of the Employee Retention Credit in Action
The ERC might seem daunting at first, but there’s no need to worry. With the specialized assistance of Disaster Loan Advisors, countless dealers have already taken advantage of this tax credit.
Here is an ERC Car Dealership Example:
This scenario demonstrates the potential consequences of not participating in the ERTC program and how much money could be lost for dealerships. There is no justification for not participating, as businesses that qualify are entitled to receive tax refund funds. Based on the information provided in this ERC guide, nearly all dealership-related businesses should be eligible to participate.
In 2019, the car dealership made a total of $30.1 million in sales revenue. However, in 2020 and 2021, they made $20.1 million and $20.7 million in sales revenue, respectively, both of which were lower than their 2019 sales revenue due to the impact of COVID-19.
To clarify, once expenses and cost of goods sold (COGS), such as auto parts, employee labor, rent, and miscellaneous, have been subtracted, the dealership’s net profit for the year. Fortunately, eligibility for and receipt of the ERC refund is not based on net profit or loss.
The dealership received two Paycheck Protection Program (PPP) loans that amounted to over $1,200,000+ in 2020 and 2021, which were later forgiven by the SBA.
Good news! The previous IRS rulings that prevented the business from claiming the ERC credit no longer apply. Even better, dealerships that received PPP loans may still qualify for the ERC credit as long as they subtract the PPP loans correctly from their ERC credit calculations.
From late March 2020 until mid-June 2021, they were eligible for an Employee Retention Credit Tax Refund of $940,217. This was not due to a mandated closure but because of mandated capacity restrictions on indoor dining during that period.
In 2020, the ERC credits were $253,872; for 2021, they were $686,345. Together, the ERC credits amounted to a total of $940,217, which was received as a tax refund from the IRS. It is worth noting that this calculation takes into account the subtraction of over $1,200,000+ received in PPP loans and the exclusion of majority owners and family members.
The dealership could have missed out on a significant amount of money if they didn’t seek expert help to fully understand how to utilize the ERTC for their car shop.
Despite being told by their Certified Public Accountant (CPA) that they were ineligible for the ERC, the dealership was actually eligible. Unfortunately, their accountant did not take the necessary steps to fully understand the intricate and perplexing Employee Retention Credit program, leaving them misinformed.
In summary, forgivable PPP loans allowed the dealers to cover payroll costs during mid-2020 and early 2021, while the IRS ERTC program provided additional cash-back coverage for nearly four years. These economic benefits were crucial for the dealership, especially with increasing costs in the automotive industry, wages, and delivery services. Ultimately, comprehending the Employee Retention Credit and its potential advantages for your dealership is vital to staying competitive in the industry.
To get the maximum benefit from the ERC tax credit, it is essential to scrutinize its details, consult with ERC tax experts, and comprehend how it works alongside other schemes like PPP. By doing this, your dealership can receive crucial tax refund relief and sustain its business for years to come.
6 Tips on How Car Dealership Owners Can Make The Most of The Employee Retention Credit
Here are some tips and ideas for how you can get the most out of the ERC.
1. Maintain Detailed Records of Employee Wages and Other Eligible Expenses
Dealership owners should maintain thorough records of employee wages and eligible expenses such as health insurance premiums and retirement plan contributions. This will facilitate their eligibility for the Employee Retention Credit. It is imperative to monitor the total amount of wages paid to each employee.
Accurate and current records will simplify the process of calculating and claiming credits on their tax returns for car dealerships and other eligible employers.
2. Must Verify the Eligible Wage Date Ranges
To determine if your employees’ pay rate is eligible for ERTC funds, it’s important to understand the different dates involved. Under the CARES Act, the qualifying dates are March 13, 2020, through December 31, 2021 (for Recovery Start-up dealerships) and through September 30, 2021, for most others. If an employee’s wages fall outside of these qualifying dates, they will not be eligible for ERTC funds. It is also important to note that the ERC cannot be claimed for wages paid before March 13, 2020.
3. Check if you qualify
To be eligible for the ERTC, please verify if your business has experienced full or partial shutdowns, capacity restrictions on indoor dining, or a significant decrease in gross receipts. This means that your gross receipts must have declined by at least 50% in 2020 compared to the same quarter in 2019 or at least 20% in 2021 compared to 2019.
4. Understand What a Qualified Wage Is
You can deduct more than just gross pay when it comes to wages. This includes the amounts you pay your full-time and part-time employees, as well as any health plan costs you cover on their behalf. However, this only applies if you had 100 employees or less paid in a quarter during 2020 or 500 employees or less paid in a quarter during 2021.
The deduction is calculated using the contributions made by both the employer and employee, which are made before taxes. Health plan contributions made by the employee that are after taxes will not be included in this total.
5. Learn all the Calculation Related to ERC
The rules regarding Employee Retention Credit have changed frequently in recent years. To calculate the credit for 2020, multiply each employee’s qualified wages (up to $10,000) by 50%. For 2021, multiply qualified wages (up to $10,000) per quarter per employee by 70%. Figuring out your total ERC credit refund for both years may vary depending on other factors. To ensure accuracy, it’s advisable to seek assistance from a professional ERC expert.
6. ERC Affiliation Rules
Businesses should consider the eligibility criteria outlined in IRS code Sections 52(a), 414(m), or 414(o) for employers. It’s important to note that the ERC has different affiliation rules than the PPP. Under the ERC, affiliated businesses are treated as one taxpayer based on the controlled group concept from the IRS for determining employee and gross receipts reductions.
7 Common Mistakes to Avoid With the ERC Claim Process For Automotive Dealerships
If you’re aware that you can receive between $26,000 and $33,000 for each employee through the ERC in the previous tax years of 2020 and 2021, you may feel motivated to act quickly and submit your request. However, it’s important to be mindful of common errors that dealerships should know about while filing their claim for the ERTC:
1. Guessing the Amount of ERC Credit You Qualify For
The IRS requires precise calculations for your dealership rather than making estimations. While it may be tempting to multiply the $26,000 per qualifying employee by your total number of employees and anticipate a substantial payment, IRS procedures are typically more complex than basic arithmetic.
It is crucial to consult an expert to determine the tax credit amount your business is eligible for, as there are several factors involved. The Employee Retention Credit (ERC) is not something you apply for, but rather it is claimed based on your qualifications and figures when you file your claim with the IRS.
2. Thinking You Do Not Qualify or Waiting Too Long Before Getting the ERC Tax Specialist’s Consultation
Due to the complexity of the CARES Act and ERC eligibility requirements, some dealership owners may mistakenly disqualify themselves without seeking advice from a tax specialist. To avoid confusion, it is recommended that dealership owners consult with an ERC tax refund specialist to perform a thorough analysis of their business or group to determine eligibility accurately.
3. Not documenting your ERC claim properly
To ensure a successful ERC application, it’s crucial to maintain proper documentation. Keep detailed records of employee wages, healthcare expenses, and other relevant costs, including receipts, invoices, and payroll documents. Additionally, keep a record of your ERC documents for future reference.
TIP: Also, note that your dealership was ordered by the state or local government to shut down or limit the capacity of indoor dining until all restrictions were lifted.
4. Reporting Unqualified Wages on Quarters That Do Not Qualify
To maximize your refundable credit, ensure that you claim all the appropriate wages and healthcare expenses. Keep in mind that the program has undergone multiple changes, so there’s a chance you may overlook some eligible expenses. Additionally, you can only claim wages from quarters that meet the program’s criteria.
5. My Dealership remained open during the pandemic, I am NOT eligible?
Actually, even if your dealership had a partial shutdown but saw a notable decline in gross receipts compared to 2019, you may still be eligible for the ERC. The key factor is the level of decrease in gross receipts.
Due to pandemic restrictions, several car dealerships in the US had to shut down their showrooms for specific periods. Additionally, some dealerships had to reduce their indoor seating capacity of showrooms by 25%, 50%, or 75%, while others had to limit their operating hours.
These temporary shutdowns, decreased capacity, or reduced hours can qualify you for the ERC.
Your dealership may qualify for the time periods during which state, county, city, municipality, or local government imposed restrictions on your business, regardless of whether you generated more revenue during 2020 and 2021. All such periods of restriction are eligible.
6. Paying a Portion of Your ERC Refund (HINT: The IRS Says NO WAY!)
If a company is asking for a fee in the range of 10% to 30% or more, it would be better to be vigilant and never deal with them, as this is a red flag.
*THE IRS EXPLICITLY DECLARES THAT THIS VIOLATES THEIR RULES AND REGULATIONS*
Charging a percentage or contingency fee for amending tax returns in exchange for a refund is against IRS guidelines and illegal. However, some companies still engage in this practice.
You can access the complete IRS information on Section § 10.27 Fees by visiting the link provided below and referring to pages 21 and 22:
The IRS states:
“…..may not charge a contingent fee for services rendered in connection with any matter before the Internal Revenue Service. A contingent fee includes a fee that is based on a percentage of the refund reported on a return, that is based on a percentage of the taxes saved, or that otherwise depends on the specific result attained.”
If a company wants to perform ERC Credit Claims, they must adhere to the rules and regulations set forth by the IRS since the ERC is a tax credit provided by the IRS.
AVOID PAYING A PERCENTAGE AND CHOOSE A DIFFERENT OPTION INSTEAD.
Be cautious when dealing with big ERC processing firms that charge a percentage or contingency fee on your ERC refund. These firms, which the media calls “ERC Mills,” may be intentionally or unintentionally exaggerating and misrepresenting business eligibility to increase their fee based on a percentage of these potentially inflated figures.
Certain ERC Mills may be deceiving dealerships either due to their greed or incompetence. This could pose a significant risk to your dealership business as the ERC claims may be inaccurate, leading to unnecessary overpayment of an inflated fee by hundreds or thousands of percent.
If the IRS investigates an ERC claim and determines that it is exaggerated or untrue, the dealership and business owners will be held responsible and face severe consequences. Not your ERC mill.
Therefore, it is important to conduct your due diligence before engaging with any ERC credit processing companies and make sure that they are reputable and knowledgeable about IRS regulations.
7. Not Seeking Expert Guidance From a Knowledgeable Erc Specialist in Accounting, Tax Advisory, and Ertc Tax Credits Can Lead To Failure
In the past year, there has been a surge of individuals and websites claiming to be experts and specialists in Employee Retention Credit (ERC). If you search “Employee Retention Credit” on Google, you will find many websites proclaiming their expertise in ERC tax credits.
There is a situation where new websites might be affiliates of bigger ERC Mills and could charge up to 30% of the ERC tax refund. This could result in hefty commissions being paid to these websites and unknowingly charged to business owners and dealerships. Besides, most of these affiliates lack detailed knowledge of how the ERTC program actually works, and they mostly function as salespeople.
DLA, or Disaster Loan Advisors, has assisted over 1500 business owners with various SBA programs and has aided more than 400 businesses nationwide with the Employee Retention Credit. DLA strictly adheres to all IRS rules and regulations for the ERC program, ensuring that dealerships and businesses are eligible and performing comprehensive ERC calculations.
DLA guides the dealership owner or principals through a step-by-step visualization of how quarters were qualified, payroll calculations were done, PPP loans were deducted accurately, and exclusion of wages for majority owners’ family members or relatives.
DLA assures business clients that their ERC refund will be maximized, qualified, and calculated according to the IRS guidelines for the ERTC program. The entire process is done step-by-step and in accordance with IRS regulations to ensure safety and compliance with the ERC program.
We charge a professional flat fee that is fair and reasonable and is determined by the amount of work involved, similar to the fee structure of a business accountant, CPA, tax preparer, or tax advisor during an annual business tax filing. This fee is not based on a percentage and is consistent with industry standards.
Book your free ERC consultation with DLA today and make sure you get the most out of the ERC program.
Car Dealership ERC Frequently Asked Questions:
Are the Tips Earned by Dealership Employees Eligible for the Employee Retention Tax Credit?
Yes! If dealership employees meet certain criteria specified by the IRS, the tips given to them can be used to claim the Employee Retention Tax Credit. Additionally, tipped wages over $20, which are subject to FICA, can also be eligible for ERTC.
What About the Full-Time and Part-Time Dealership Employees?
It depends. In certain instances, the Employee Retention Credit (ERC) considers both part-time and full-time employees as equal.
If your dealership had 100 or fewer employees who were paid in a quarter of 2020, then all their gross wages will be counted. For 2021, dealerships with less than 500 employees paid in a quarter are eligible for the full ERTC for all their employees’ wages, including part-time, full-time, and tipped wages.
The rules become complicated for bigger companies that pay more than 100 employees in a quarter in 2020 or more than 500 employees in a quarter in 2021. According to IRS rules, only wages paid to full-time employees who DID NOT work are considered qualified wages in eligible quarters. This means that employees who received payment during 2020 and 2021 to stay at home without working are included. It can be confusing, so it’s best to consult with an advisor.
Does the Employee Retention Tax Credit Apply Solely to Dealerships?
No! The Employee Retention Tax Credit is available for businesses of all sizes, not just dealerships. It was created under the CARES Act to assist businesses in retaining their employees and covering qualified wages.
Any business that operated in 2020 or 2021 may be eligible for the tax benefit based on the criteria outlined by the IRS, not just car dealerships or car businesses.
Hospitality businesses such as bars, hotels, and gyms are also eligible for the ERTC. To be eligible, businesses must meet certain criteria, including a gross receipts test, shutdown or partial shutdown, capacity restrictions, supply chain disruptions, or other negative impacts or losses due to COVID based on IRS guidelines.
Should I Add up the Total Gross Receipts of All My Dealerships?
It depends. Dealerships belonging to a group can receive a credit based on their gross receipts value as long as they meet or exceed the IRS aggregate sum. This indicates that even if the combined total of all dealerships in the group doesn’t reach the threshold, individual dealerships can still qualify for the credit.
Which Brands Dealership Employees Are Eligible for the ERTC Program?
The ERC is available to various car brand dealerships, including the ones listed below:
1. Toyota
2. Ford
3. Chevrolet
4. Honda
5. Nissan
6. Jeep
7. Hyundai
8. Kia
9. Ram Trucks
10. Subaru
11. GMC
12. Volkswagen
13. BMW
14. Mazda
15. Mercedes-Benz
16. Lexus
17. Tesla
18. Dodge
19. Audi
20. Buick
21. Acura
22. Volvo
23. Cadillac
24. Chrysler
25. Mitsubishi
26. Land Rover
27. Lincoln
28. Porsche
29. Infiniti
30. Genesis
31. Mini
32. Maserati
33. Alfa Romeo
34. Jaguar
35. Bentley
36. Ferrari
37. Lamborghini
38. Aston Martin
39. Polestar
40. Fiat
41. Rolls-Royce
42. McLaren
43. Lucid
44. Bugatti
45. Lotus
46. Rivian
47. Canon
48. Pontiac
49. Oldsmobile
50. Rimac
There are numerous types of dealerships and auto service businesses that meet the eligibility criteria. It is likely that your business qualifies if it serves any kind of car-related services. This includes new and used car dealerships, independent auto body shops, engine rebuilders, muffler shops, brake repair companies, transmission repair shops, and oil change providers.
Do All Dealerships Really Qualify for the Employee Retention Credit?
Yes! If a dealership can provide evidence of government-mandated capacity restrictions during a certain time period, from the start date until the end date of those restrictions being lifted, they can qualify for the ERC Tax Credit Refund. This applies even if the dealership earned more revenue in 2020 and 2021 than what it earned in 2019.
It’s important to note that qualifying for the credit does not guarantee that a dealership will receive the refund, as the refund amount will depend on several other factors, such as gross receipts.
Conclusion and Summary for Dealership Employee Retention Tax Credits
To qualify for the Employee Retention Credit, companies need to maintain precise records of their business tax credit. This involves preserving original payroll documents, including paystubs, W-2s, and other wage-related files.
It is important for businesses to maintain records of government orders or restrictions that led to a decrease in gross receipts. By being aware of the guidelines and criteria governing the Employee Retention Credit, car dealerships can ensure that they receive all the entitled benefits and are better positioned to recover from any monetary setbacks arising from the COVID-19 pandemic.
The Employee Retention Credit is a helpful tax credit that can benefit dealerships and other businesses affected by the COVID-19 pandemic. If your dealership has faced losses or capacity restrictions, even if revenue has increased, it’s advisable to apply for the ERTC. Your dealership is eligible for this credit.
Car Dealership Owners Qualify: Get Help on How to Apply for the Employee Retention Tax Credit (ERC/ERTC): Claim Up To a $26,000 Refund Per Employee for Your Car Dealership
Disaster Loan Advisors™ can assist your car dealership 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, car dealership business owners 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 car showroom business.
Schedule Your Free Employee Retention Credit Car Dealership Consultation to see what amount $ of employee retention tax credit refund your car dealership qualifies for.
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.
As a leading dedicated member of the Tax and Accounting Team at Disaster Loan Advisors™, Mark focuses on unlocking the ERC Tax Credit's potential for eligible firms that qualify, providing strategic advice, and detailed guidance to ensure substantial financial recovery and growth. His methodical approach to client engagement includes comprehensive deep-dive analysis, customized consultation and guidance, and a commitment to achieving tangible results for each business served.
Disaster Loan Advisors™ (DLA) offers a comprehensive suite of services designed to navigate the complexities of the Employee Retention Tax Credit (ERC) program, ensuring that qualified businesses leverage the maximum possible benefit with minimum hassle. Unlike some firms that charge exorbitant contingency or percentage-based fees (often between 10% to 30% of your ERC refund), DLA operates on a fair and reasonable, transparent flat-fee structure that aligns with the IRS's guidelines.
If you are looking for an ERC Company that believes in providing professional ERC Services and value for small business owners, in exchange for a fair, reasonable, and ethical fee for the amount of work required, Disaster Loan Advisors™ is a good fit for you. STAY SAFE. STAY COMPLIANT. KEEP MORE OF YOUR REFUND.™
- 941-X: 18c. Nonrefundable Portion of COBRA Premium Assistance Credit, Form Instructions (revised 2024) - May 2, 2024
- 941-X: 18b. Nonrefundable Portion of Credit for Qualified Sick and Family Leave Wages for Leave Taken After March 31, 2021, and Before October 1, 2021, Form Instructions (updated 2024) - May 1, 2024
- 941-X: 18a. Nonrefundable Portion of Employee Retention Credit, Form Instructions (2024 updates) - April 30, 2024