The Employee Retention Credit (ERC) tax refund for manufacturing companies, distributors, suppliers, plants, manufacturers, and other small and large factory-type businesses, provides a valuable tax refund from the Internal Revenue Service (IRS). Many manufacturers in every state qualify a portion of the eligibility period due to mandated state government, county, city, or municipality restrictions placed on plant locations during the COVID pandemic. Manufacturers were forced to partially or fully close factories, limit assembly line capacity, reduce workforce operation capacity, reduce hours of operation, and had on-going supply chain delay issues of getting raw materials from overseas, to shipping their products to their dealers and suppliers. Even if a manufacturing company revenue didn’t decline, or even if it increased, under the full and partial shutdown rules and/or supply chain issues, most manufacturing companies may still qualify for up to a $26,000 to $33,000 employee retention tax credit refund per employee on the company’s payroll during the 2020 and 2021 tax years.
Manufacturing companies, suppliers, warehouse distributors, plants, factories, and other manufacturers may be missing out on a potentially large Manufacturing Employee Retention Credit Business Tax Refund by not fully understanding how and why their company qualifies. Image Credit: Pressmaster / 123rf.
“With more that 591,000 manufacturing businesses in the United States employing almost 13,000,000 manufacturer employees on payroll, the manufacturing industry was definitely one of the most disrupted industries during the pandemic. Many manufacturing companies will qualify for the Employee Retention Tax Credit in some way, depending on their particular business circumstances,” said Marty Stewart, Chief Strategy Officer (CSO) with Disaster Loan Advisors (DLA).
All manufacturers may be eligible to claim the IRS employee retention credit in 2023, 2024, and even 2025, “if” they qualify any portion of time between March 13, 2020 to September 30, 2021 for manufacturing companies that were around prior to the COVID pandemic. For manufacturers, suppliers, or distribution companies that were started or purchased after February 15, 2020, those manufacture types are eligible from the time their company opened until December 31, 2021. These types of manufacturing businesses are also referred to as a recovery startup business, and qualify for the 4th quarter of 2021.