Bank ERC Rebate – Getting Your Own
Yours might be the case of the emperor lacking clothes. While many banks are helping their clients with employee retention credits (ERC) (If you are not, see HERE), many banks with 500 employees or less still need to collect their OWN ERC rebates. During the pandemic, most banks retained their employees and suffered higher costs, lower customer interactions, less branch traffic, and a revenue drop in many business lines. This article details why banks are a special case and then provides our interactive estimate to see what your bank might be eligible to receive.
Bank ERC Background
Bank ERCs is a refundable tax credit available to businesses, including financial institutions, affected by the global pandemic as granted under the CARES Act and modified by the Relief Act. Any company that retained employees for the second quarter of 2020 through the end of the year in 2021 AND can prove they were impacted by the pandemic’s related closures and supply chain disruptions would be eligible.
To claim their ERC rebate, banks need to restate their 941 IRS forms and refile with the Internal Revenue Service to receive a tax credit equal to 70% of eligible wages up to $10,000 per employee, per quarter (for the first three quarters of 2021). For employers with 500 or fewer employees, all wages paid to employees can be qualified.
While some financial institutions have claimed this credit, many have not because they do not believe they are eligible or because their accounting firm does not have a specialty in banking and the related nuances.
ERC Assist is SouthState’s unique service customized for the banking industry. It helps financial institutions evaluate their eligibility for ERC, and if they qualify, it helps them prepare the materials needed to support an ERC claim with the IRS.
ERC Assist works with a nationally recognized, top-tier accounting firm specializing in financial institutions and has helped more than 25 banks collate the data and documentation needed to file an ERC claim. The expertise is understanding how financial institutions and their branch network were impacted.
Bank ERC Eligibility
To obtain a bank ERC rebate, there’s an extensive set of criteria to establish why and how the pandemic has inhibited each bank’s operations. There is a gross receipts test where a bank would qualify if they experienced a significant decline in gross revenue during the impacted calendar quarter compared to the same calendar quarter in the prior year. Fortunately, most banks didn’t suffer a material decline in revenue.
Then there is a second test where a financial institution experienced a full or partial suspension of operations during any calendar quarter in 2020 due to orders from an appropriate governmental authority limiting commerce, travel, or group meetings.
Examples of how financial institutions could qualify:
- A bank was required to shut down its lobby, and certain services offered within the bank could not be performed online or in the drive thru/walk-up window.
- Social distancing and cleaning requirements negatively affected the quality of service, hours of operation, and number of customers allowed into a location such as an office or branch.
- Drop in sales of particular offerings that require live interaction: notary fees, new accounts deposit opening in person, loans, wire transfers, wealth management, etc.
- Unable to hold in-person meetings—with customers, partners, regulators, industry representatives, and more.
- A supplier of critical components, such as armored services or ATM parts, could not supply the financial institution with supplies or services due to supply chain disruption or government orders.
- Unable to sell products/services due to travel/meeting restrictions.
- A steep drop in office or branch customer foot traffic.
Seeing Your Bank’s Potential Rebate
Since we know the size of your bank, the number of branches, the location of those branches, and the number of employees through your quarterly regulatory filing, we have taken the liberty to estimate your potential bank ERC rebate HERE if you are a bank with less than 500 employees.
Once you see your estimate, if you want to move forward, our ERC Assist team will help you gather your documents and walk you through the process. We understand the process and banking since we have been through the ERC process with hundreds of clients. Our ERC Assist team can give you the confidence to move forward.
Only $80B of these funds remain available for all businesses and financial institutions should at least see if they’re eligible. Further, the statute of limitations for filing Form 941X to claim a refund is three years from the date the original return was filed or two years from the date the taxes were paid.
Go HERE if you want to see your estimate and claim your credit.