Engineering

Let’s get technical with your tax incentives.

StenTam can help your engineering firm leverage numerous government tax programs so you can focus on innovation, job growth and equipment advancement.

The United States often is at the forefront of innovation and development — in large part because of the knowledge and expertise of the skilled workforce in the engineering industry. These talented professionals produce and optimize infrastructure, products, efficiencies and workflows that keep businesses in other industries running smoothly.

The unforeseeable COVID-19 pandemic markedly affected the engineering industry, with projects delayed or canceled altogether and entire workplaces being shifted from on-premise to remote. Engineering businesses had to put planned innovations on hold while dealing with supply chain bottlenecks, a reduced workforce and rising expenses.

To financially aid these businesses and encourage them to keep their employees on the payroll during the pandemic, the U.S. government in March 2020 engineered and enacted a refundable payroll tax credit. Referred to as the Employee Retention Credit (ERC), it was part of the Coronavirus Aid, Relief and Economic Security Act (CARES Act).

What does the ERC mean for your engineering business? That depends on your eligibility for the tax credit.

For example, your 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. Or, it might be eligible if it 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.

Just how much can you receive through the Employee Retention Tax Credit? 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 (capped at $5k per employee). For 2021, the ERC 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:
Wisconsin, March 24, 2020 –
Governor Evers signed Executive Order #12 which directs all individuals present in the State of Wisconsin to stay at home or at their place of residence, except for specific outlined exceptions. All non-essential businesses and operations are required to cease, except for Minimum Basic operations, which are defined as the minimum necessary activities to maintain the value of the business’s inventory, preserve the condition of the business’s physical plant and equipment, ensure security, process payroll and employee benefits, and other related functions.

Essential Businesses and Operations are allowed to continue operations but must observe Social Distancing Requirements and, to the maximum extent possible, use technology to avoid meeting in person. Essential Businesses and Operations are defined according to the federal CISA guidance as well as additional businesses including grocery and medicine stores, child care services, and gas stations, among others.

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

Check out these FAQs to find out more about the Employee Retention Credit and best practices for applying for it:

What Benefits Does the Employee Retention Credit Offer for the Engineering Industry?
Whether you’re looking to retain your workforce or want to invest in new technology and/or equipment, the ERC can provide you with funds to do so. By providing you with immediate cash flow benefits, you can direct your ERC refund as you see fit.
How Long Is the ERC Available?
The Employee Retention Credit expired in September 2021. However, qualified engineering 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.

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 Do I Know Which COVID-19 Governmental Orders Were Enacted in the State Where My Engineering 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.
Is the Employee Retention Credit the Same as the Paycheck Protection Program (PPP)?
No. Although both programs were developed to assist businesses struggling financially due to the COVID-19 pandemic, the PPP was a forgivable loan that provided small businesses with funds to pay up to eight weeks of payroll costs, including benefits, along with interest on mortgages, rent and utilities. The ERC is a refundable and non-refundable credit that eligible businesses can claim on qualified wages, including some health insurance costs, paid to employees.
How Do I Apply for the Employee Retention Credit?
Engineering 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.

At StenTam, we’re innovators in tax services and other financial matters. Our skilled tax professionals are here to guide you through the ERC application and submission process. We’ll ensure you receive the maximum credit you’re owed. Contact us today to get started!

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?

Accelerate your growth and invest in your future.

Engineering remains a pivotal industry that delivers design, products, and technology to our ever-changing and evolving world. StenTam helps you capture maximum refunds and maintain full compliance as you pursue various tax incentive opportunities. We are here to help your business thrive in this competitive market; learn how we can help you get the refunds you deserve.
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Secure Technology

Our proprietary software enables you to securely transfer information to our team with every transaction.
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Compliance-Driven

Never skip a beat: working with our multidisciplinary team means your claim is prepared within the program guidelines.
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Risk-Free Filing

Each claim receives the appropriate documentation and audit ready file. StenTam is your long-term solution, and will help you defend your claim should there be an inspection.

Client Case Study

Modern Mobility Partners

An Atlanta-based transportation planning and traffic engineering consulting firm struggled as local and federal orders caused many of their clients to partially or fully shutdown. The Employee Retention Tax Credit...

Read More
Modern Mobility Partners

Modern Mobility Partners

An Atlanta-based transportation planning and traffic engineering consulting firm struggled as local and federal orders caused many of their clients to partially or fully shutdown. The Employee Retention Tax Credit...

Read More
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