Due to partial closures or reductions in gross income in 2020 and 2021, it is still possible for law firms to be eligible for tax credits. If law firms have or were subject to government mandates as a result of certain courts closing in 2020 and possibly into 2021, they might qualify as an eligible employer for the credit. To collect ERC benefits, law firms can file amended payroll tax returns.
If a law firm’s business operations were partially stopped as a result of court closures, moratoriums on collections/foreclosures, and other factors, even if they never experienced a pandemic-related decline in revenue, they may be eligible for relief from the ERC. It is important to note that pandemic-related government orders causing qualifying partial shutdowns were more frequent than many employers may realize—particularly for those law firms with practices relying on:
- fully open, staffed, and operational courthouses; and
- a wide range of in-person interactions, especially the ability to conduct in-person jury trials, all of which lack comparable virtual substitutes.
Law firms still have time to qualify by proving that the following reduction in gross receipts occurred:
Tax Year 2021 (Quarters 1, 2, and 3)
For an employer to qualify, their gross sales must have decreased by more than 20% from the same calendar quarter in 2019.
Tax Year 2020 (Quarters 1 through 4)
An employer is qualified if gross receipts for the company are more than 50% lower than those for the same calendar quarter in 2019.
The ERC, which was introduced in March 2020 and offers legal firms affected by the COVID-19 pandemic up to $26,000 per employee in 2020 and 2021, continues to be one of the largest relief opportunities. Employers can retroactively file for the ERC based on hardships suffered throughout 2020 and the first three quarters of 2021, even for those legal firms that are already starting to recover.
Have any questions? Our support team is here to help you with any questions or issues you might have. We take care of the hard work, so you never have to worry about it! Our team of professionals works to ensure that your company receives the full ERC credit it is entitled to. Contact us to find out more about ERC credits and how we can assist you.