ERC Credit FAQ #19. What Organizations Are Considered An “Instrumentality” Of The Federal Government, Or Of A State Or Local Government, For Purposes Of Determining If An Employer Is Eligible For The Employee Retention Credit?

September 11, 2022 Leave a comment

Frequently asked question #19 “What organizations are considered an instrumentality of the Federal government, or of a State or local government, for purposes of determining if an employer is eligible for the Employee Retention Credit?” under the Determining Which Employers are Eligible to Claim the Employee Retention Credit section of FAQs: Employee Retention Credit under the CARES Act, provided by the IRS.gov to help business owners understand the ERC program. Information is below for the question #19 What organizations are considered an “instrumentality” of the Federal government, or of a State or local government, for purposes of determining if an employer is eligible for the Employee Retention Credit?

ERC Credit Frequently Asked Question #19:

Determining Which Employers are Eligible to Claim the Employee Retention Credit FAQs

19. What organizations are considered an “instrumentality” of the Federal government, or of a State or local government, for purposes of determining if an employer is eligible for the Employee Retention Credit?

In general, for employment tax purposes, the IRS considers six factors in determining whether an organization is an instrumentality:

  • whether the organization is used for a governmental purpose and performs a governmental function;
  • whether performance of the organization’s function is on behalf of one or more States or political subdivisions;
  • whether there are any private interests involved, or whether the States or political subdivisions involved have the powers and interests of an owner;
  • whether control and supervision of the organization is vested in a public authority or authorities;
  • if express or implied statutory or other authority is necessary for the creation and/or use of such an instrumentality, and whether such authority exists; and
  • the degree of financial autonomy and the source of its operating expenses.

See Rev. Rul. 57-128, 1957-1 C.B. 311.  No one factor is determinative; instrumentality status is based on all the facts and circumstances.  These same factors apply to identify an instrumentality for purposes of determining whether an employer is eligible for the Employee Retention Credit.

For more Internal Revenue Service (IRS) Department of the Treasury Employee Retention Credit (ERC) Determining Which Employers are Eligible to Claim the Employee Retention Credit FAQs, visit the official IRS.gov tax website.

Conclusion and Summary on ERC Credit FAQ #19. What organizations are considered an “instrumentality” of the Federal government, or of a State or local government, for purposes of determining if an employer is eligible for the Employee Retention Credit?

The “What organizations are considered an “instrumentality” of the Federal government, or of a State or local government, for purposes of determining if an employer is eligible for the Employee Retention Credit?” is Frequently Asked Question #19 of many commonly asked questions small business owners are wondering about how to file the Employee Retention Tax Credit (ERTC). The IRS ERC Tax Credit program is a confusing and complex process to determine the correct ERC calculations your business qualifies for. Answers to “What organizations are considered an “instrumentality” of the Federal government, or of a State or local government, for purposes of determining if an employer is eligible for the Employee Retention Credit?” and filling out form 941-X may change slightly from frequently updated rules and regulations from the IRS. Leave a comment below if you have further questions on ERC Credit FAQ #19.

Help Completing / Filing / Claiming the Employee Retention Credit (ERC)

Receive Up to a $26,000 ERC Credit from the IRS Per Employee

Disaster Loan Advisors can assist your business with the complex and confusing Employee Retention Credit (ERC), Form 941-X, and the Employee Retention Tax Credit (ERTC) program. 

Depending on eligibility, business owners and companies 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 Tax Credit Program is a valuable IRS tax credit you can claim. This is money you have already paid to the IRS in payroll taxes for your W2 employees.

We DO NOT charge a percentage (%) of your ERC Refund like some companies are charging. Some ERC firms out there are charging upwards of 15% to 35% of your ERC refund!

Our professional ERC fee and pricing structure is very reasonable in comparison.

If you are looking for an ERC Company that believes in providing professional ERC Services and value, in exchange for a fair, reasonable, and ethical fee for the amount of work required, Disaster Loan Advisors is a good fit for you. 

Schedule Your Free Employee Retention Credit Consultation to see what amount of employee retention tax credit your company qualifies for.

Cover Image Credit: Irs.gov / ERC FAQ / Disaster Loan Advisors

Mark Monroe
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