Employer Retention Credits “ERC” – Are they legit?
The short answer is yes, they are legit! The longer answer is that you need to be careful as there are unscrupulous promoters out there promising you $26,000 per employee when in fact you may not qualify for any credit at all. Yes, just like you, we are getting hammered daily with emails and phone calls from companies promising to help us (a CPA firm) receive $26,000 per employee in ERC. However, because we have actually been trained to read lax law and interpret it, we know that we do not qualify for any credits.
One of the purposes of this E-Blast is to let you know that the ERC is legit and we have helped many clients receive legitimate ERC refunds and will continue do so. We will spare you the details of trying to explain the law as it is very complicated and each business’s situation is unique. These ERC companies try very hard to convince you that we do not have the expertise to help you with these claims. That simply is not true! Please remember that as CPAs, Pat and Brad have over 25 years each of reading tax law, interpreting it, apply it and representing you with the IRS. Who better to help you understand something that is based on statutory tax law?
So rather than bore you with the gory details of ERC our real purpose is put you on alert that there are many fraudulent companies filing these claims and it seems that they have increased their marketing push. We ask that if you hire a company to help you with the ERC, that you please call us as soon as possible to help advise you!
A little-known fact is that if you obtain an ERC refund by amending your 2020 or 2021 Form 941 payroll tax return, you then have to amend your business income tax return to reduce the wages that you deducted in those years by the amount of the credit. That is where we come in and why we need to be involved as soon as possible. In order for us to amend your business income tax returns we are taking a position that we believe the credits are in fact legit and that you qualify. In order to do that we have to work closely with the ERC company to ensure that everything is in place to support an eventual audit. And yes, these claims will be audited!
Earlier this year, the IRS added the ERC Claims to its annual list of Dirty Dozen tax scam. In addition, they continue to put out social media posts and notices warning about ERC claims and discussing that they are ramping up audits of ERC claims. You can read the latest here https://www.irs.gov/newsroom/irs-alerts-businesses-tax-exempt-groups-of-warning-signs-for-misleading-employee-retention-scams-simple-steps-can-avoid-improperly-filing-claims.
In summary, please reach out to us if you have any questions about the ERC program and whether or not you qualify. The risk of an audit and the potential penalties and interest are too great to not have us by your side from the beginning!
Brad and Pat