Construction

Building Up Your Tax Incentives

Let StenTam help your construction company receive eligible tax credits so you can better invest in infrastructure, energy efficiency and job creation.
Building a successful construction business takes an abundance of time, resources and talent. Warm, sunny weather doesn’t hurt, either.

When the COVID-19 pandemic came on site and lockdowns and other restrictions were imposed, even the best-run construction businesses took a hit financially. Many not only suffered from staffing shortages but also were unable to source basic building materials.

Some construction employers might not be aware of a tool offered by the United States government in the form of a tax credit. Referred to as the Employee Retention Credit (ERC), it’s a refundable payroll tax credit introduced through the Coronavirus Aid, Relief and Economic Security Act (CARES Act) to encourage eligible employers to keep their employees on the payroll during the pandemic.

Just how much of a tax credit can eligible construction businesses receive through the ERC? It depends on the number of employees and for what years they qualify.

For 2020, the ERC is a credit against certain payroll taxes of 50 percent of the wages paid — up to $10k per employee — from March 12 – December 31, 2020. It’s capped at $5k per employee. The ERC for 2021 is a quarterly tax credit of 70 percent of the first $10,000 in wages per employee in each quarter of 2021 from January to September 2021 (capped at $7K per employee per quarter).

Government Orders

Example: Alaska, March 15, 2020 – Alaska is requiring all out-of-state travelers per a health mandate to self-isolate for 14 days. Critical Infrastructure businesses with employees traveling to Alaska must submit a plan to the Department of Commerce, Community, and Economic development outlining how they will maintain critical infrastructure. Quarantined travelers must remain in their hotels for 14 days or until they leave Alaska. Attachment A to the Order defines critical infrastructure as twenty four categories including healthcare, construction and public works, mining, financial services, grocery stores, agriculture and fishing, gas stations, suppliers of essential supplies to other essential businesses, professional services necessary to assist compliance with legally-mandated activities, among others.

Find More Government Orders Specific to Your State on Our Insights Page

How do you know if your business is eligible for the Employee Retention Credit? Check out these FAQs to find out:

What Benefits Does the Employee Retention Credit Offer for Construction Businesses?
An ERC refund can be utilized by construction employers in a variety of ways. Some businesses use the money to hire more employees or pay off debt, while others use it to fund the purchase of new equipment or conduct marketing campaigns.
How Do I Know if My Business is Eligible for the ERC?
Your construction business may be eligible for the ERC if its operations were fully or partially suspended by governmental COVID-19 orders, thereby limiting commerce, travel or group meetings. You might also be eligible if your business experienced a significant decline in gross receipts during 2020 or within the first three quarters of 2021. New startup businesses that began operations after February 15, 2020, may also qualify, regardless of revenue.

There are two main ways to be eligible for stimulus refunds:

  • If your business matches the required decline in revenue within any quarter of 2020 or 2021.
  • If you have W-2 employees.
What Exactly Is a Significant Decline in Gross Receipts Under the Employee Retention Credit Program?
The answer to this question varies from 2020 to 2021. An employer had a significant decline in gross receipts in 2020 during the first calendar quarter for if its gross receipts for that quarter were less than 50 percent of those for the same calendar quarter in 2019. An employer had a significant decline in gross receipts in 2021 during the first calendar quarter for its gross receipts for that quarter if they were less than 80 percent of those for the same calendar quarter in 2019.
How Long Is the ERC Available?
The Employee Retention Credit expired in September 2021. However, qualified construction employers can still file paperwork and retroactively receive claims for the ERC in 2023 by filing a Form 941-X for relevant quarters.

For all four quarters in 2020, the deadline to apply is April 15, 2024. For all quarters in 2021, the deadline is April 15, 2025.

How Do I Know Which COVID-19 Governmental Orders Were Enacted in the State Where My Construction Business is Located?
We have a list of state-specific COVID-19 orders on the Insights page of our website. Just click on your state to see the applicable orders and restrictions.
How Do I Apply for the Employee Retention Credit?
Construction business employers must first determine their eligibility, starting by ensuring they meet IRS qualifications. To retroactively claim the ERC, amend previously submitted Forms 941 by filing and submitting Form 941-X for each qualifying quarter.

If you are unsure about how to file for the ERC or need assistance preparing and submitting your application, consider working with one of our talented tax professionals. We’ll guide you through the process to ensure you get the credit you deserve. Contact us today to learn more!

Qualifying orders (From IRS)

What kind of government orders qualify my business or organization for the ERC? (added July 28, 2023)

To qualify for ERC, you need to have been subject to a qualifying government order related to COVID-19 that caused a full or partial suspension of your trade or business operations. The government order may be at the local, state, or federal level.

Examples of governmental orders:

  • An order from the city’s mayor stating that all non-essential businesses must close for a specified time period;
  • A state’s emergency proclamation that residents must shelter in place for a specified period, except for essential workers;
  • An order from a local official imposing a curfew on residents that impacts the operating hours of your trade or business for a specified time period;
  • An order from a local health department mandating a workplace closure for cleaning and disinfecting.
Can I rely on a recommendation, bulletin or statement issued by a government authority to qualify for ERC? (added July 28, 2023)

No. To qualify for the ERC, you must have been subject to a government order that fully or partially suspended your trade or business.
Recommendations or statements encouraging you to take certain actions are not orders.
If you use a third party to calculate or claim your ERC, you should ask them to give you a copy of the government orders – not a generic narrative about an order. Read the order carefully and make sure it applied to your business or organization.

Is being subject to a government order enough to make me eligible for ERC? (added July 28, 2023)

No. You need to demonstrate that the government order was related to COVID-19 and that it resulted in your trade or business being fully or partially suspended.

What does it mean to be fully or partially suspended? (added July 28, 2023)

Whether your business or organization was fully or partially suspended depends on your specific situation. For examples, see Notice 2021-20, Part III, Section D.

Some examples of who doesn’t qualify under this eligibility factor:

  • If all your employees were able to telework during the pandemic and your business continued to operate, your business wasn’t suspended.
  • If your customers were affected by a stay-at-home order, but no orders applied to your business operations, you weren’t suspended.
  • If you voluntarily closed your business or reduced hours of operation, you weren’t ordered to suspend.

You could still qualify for ERC based on a decline in gross receipts even if you don’t qualify under suspension of operations due to government order.

Was my business or organization fully or partially suspended if I had a supply chain issue? (added July 28, 2023)

A supply chain issue, by itself, does not qualify you for the ERC.

The IRS provided a narrow, limited exception if an employer was not fully or partially suspended but their supplier was. However, it applied only when the employer absolutely could not operate without the supplier’s product and the supplier was fully or partially suspended themselves.

In addition to having the supplier’s governmental order, you will need to show that:

  • The government order caused the supplier to suspend operations,
  • You couldn’t obtain the supplier’s goods or materials elsewhere (regardless of cost), and
  • It caused a full or partial suspension of your business operations.

Why Work with StenTam?

Paving The Way for More Tax Savings

Construction is a pivotal business that creates the buildings, homes and infrastructure that we use every day. Construction businesses everywhere are claiming tax credits, such as the Employee Retention Tax Credit (ERC) and the Research and Development Tax Credit (R&D). StemTam will help you build the foundation for your yearly tax credit eligibility so you can better invest in areas that matter to your business and help build a safer, more efficient and cleaner society.

Continued growth to our infrastructure relies on additional funding. Find out what tax incentives you may be missing out on.

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Client Case Study

Insulation & Supply Company

A tile and stone distributor based in Wisconsin was impacted as local and federal governmental orders mandated partial and full shutdowns. As supply chain issues hit the construction industry on...

Read More
Insulation & Supply Company

Insulation & Supply Company

A tile and stone distributor based in Wisconsin was impacted as local and federal governmental orders mandated partial and full shutdowns. As supply chain issues hit the construction industry on...

Read More
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