What Is the Employee Retention Credit (ERC)? 

April 1, 2023

Jay Blumenthal  -  AFM International Secretary-Treasurer

“The Employee Retention Credit (ERC) is a refundable tax credit for businesses that continued to pay employees while shut down due to the COVID-19 pandemic, or had significant declines in gross receipts from March 13, 2020, to Dec. 31, 2021. Eligible employers can claim the ERC on an original or adjusted employment tax return for a period within those dates. Only recovery startup businesses are eligible for the ERC in the fourth quarter of 2021.” — IRS website.  

Recently, the AFM engaged our accountants (BDO) to provide guidance regarding the Federation’s eligibility for the ERC, and if eligible, to guide us through the application process. During the period (described above), the AFM retained most of our employees (staff) who worked remotely. As many of you were affected by the closing of music venues, reducing your income from the making of live music, so too were the Federation’s revenue streams affected negatively.  

Throughout this time, the Federation continued its operations as incoming and outgoing mail needed to be handled, new use payments needed to be distributed to musicians, and federal legislation supportive of musicians needed to be pursued. We held discussions with some employers over terms that would allow a percentage of salary to continue to flow to symphony musicians, in exchange for use of their recorded product. Necessary guidance and new protocols needed to be developed and provided to affiliate locals. These are but a few of the activities that continued at the AFM during the applicable period.  

The ERC kickoff meeting with BDO went very smoothly. Our small ERC team includes AFM Comptroller Michelle Ledgister, BDO Audit Director Jessie Mabutas, BDO Managing Director of Business Incentives & Tax Credits Brad Poris, and BDO Tax Credit Expert Ian Brown. Poris and Brown have three years of experience applying for ERCs, so our application preparations and filing (when ready) will be in good hands.  

As I write this, our priority is the AFM LM-2 report (which has a March 31 DOL submission deadline) and the completion of the AFM’s annual audit. The financials from the audit are needed to complete the AFM Annual Report. Once the annual report is complete, it will be sent to the printer so hard copies can be placed in each AFM Convention delegate’s bag.  

The filing deadline for the ERC application, covering the 2020 period, is April 2024. I fully expect our application will be filed long before that deadline. 

Final reminder: For US local officers with locals that have a fiscal year that coincides with the calendar year, your LM-2, LM-3, or LM-4 report covering 2022 was due March 31, 2023. There is no grace period! Please upload your report immediately if you have not already done so.  

Each year, as part of the Voluntary Compliance Program, the AFM meets with the Department of Labor (DOL). We are presented with a report that lists every US affiliate local and the date their LM report was filed, and if filed late, how many days late it was filed. The report includes the same information for the prior year. If the DOL observes a pattern of late filing, that local is much more likely to be chosen as the subject for a DOL audit. Trust me, being the subject of a DOL audit is not a pleasant experience. Do yourself a favor and get your LM report filed if it was due March 31. 

---