ASA Central Network

  • 1.  Employee Retention Credit - Common Law Employer

    Posted 01-20-2022 17:02


    I have had discussions with a CPA who states that only the "common law employer" can obtain an employee retention credit for an employee even if our company pays their salary and includes them on our payroll tax returns. Has anyone dealt with this issue for the ERC?  


    Carmen Stanton
    Career Employment Service
    Bartlesville OK
    (918) 335-2300
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  • 2.  RE: Employee Retention Credit - Common Law Employer

    Posted 01-21-2022 10:12
    This is the first I've heard of this as it relates to ERTC. I don't believe what your CPA said is true based on everything I've read. My CPA was super skeptical about whether we qualified. He refused to file our 941X documents. We worked with Synergi for the tax credits and they've assured us that we are qualified and referred us to a CPA who would file everything on our behalf. Luckily, they stand behind their work and will get involved if there is an audit. Not sure if this helps....

    Larkin Dailey
    Employ Partners
    Marietta GA
    (770) 953-6054

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  • 3.  RE: Employee Retention Credit - Common Law Employer

    Posted 01-21-2022 11:38
    Hi Carmen,

    If you are paying the salary and include them on your payroll tax return... you ARE the "common law employer / employer of record". Not knowing your structure or industry vertical there may be some nuance I'm unaware of, but you should continue to explore.

    We met all the requirements, primarily due to our founding in April of 2020. Happy to introduce you to the company I'm working with (Clarus Solutions). They have been a true advocate for our business and full of fantastic data for our CPA's comfort.

    Good luck, it can be a big one time credit!

    Nicholas Mitchell
    Capital Employment Group
    Meridian ID

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  • 4.  RE: Employee Retention Credit - Common Law Employer

    Posted 01-22-2022 14:58

    Your CPA may be relying on the words of the law and regulations but not taking into account how those words have been interpreted by the government.

    Several federal laws and regulations (for tax withholding, unemployment compensation, Affordable Care Act, and others) define "common law employer" in terms that, in similar combinations of words, say that the employer with the right to control the details of the person's work is the common law employer of that person. Taken literally, it would be reasonable to conclude that staffing customers, who direct and supervise the work of assigned employees, would be their common law employers. Nevertheless, in those areas of the law, the government and its agencies have in practice recognized that contract staffing firms (temporary help firms) are usually the common law employers of their assigned employees, even though they delegate operational control to customers. 

    However, "staffing" firms that perform essentially passive services – such as PEOs, employers of record, and payrolling firms -- tend not to claim or qualify for common law employer status. 

    If your staffing firm performs active management of your assigned employee workforce, including recruiting, assignment and reassignment to various clients, independent benefit plans, discipline, termination, and employment law management, your common law employer status should be solid unless the government changes its view of the issue. 

    Some staffing customers have tried to bully their staffing firms into disclaiming their common law employer role with the assigned employees so that the customers could obtain the financial benefits of the CARES law. This tactic is clearly an abuse of the law, and staffing firms should not become parties to it.

    George Reardon
    George Reardon, Attorney & Counselor at Law
    Houston TX
    (281) 888-6641

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