Hey ,
The IRS has issued an important warning regarding the Employee Retention Credit (ERC).
They identified that some unscrupulous promoters misrepresented the eligibility rules for the ERC, leading many businesses to claim credits they are not qualified for.
To help you avoid potential issues, I am highlighting seven suspicious signs that may indicate an incorrect ERC claim.
Signs Your ERC Claim Could Be Incorrect:
Too Many Quarters Claimed: It is uncommon for a business to qualify for the ERC for all quarters it was available. Review your eligibility carefully for each quarter.
Government Orders That Don’t Qualify: Some promoters wrongly suggested that any government order qualifies a business for the ERC. Ensure that your operations were indeed affected by qualifying government orders.
Too Many Employees and Wrong Calculations: The ERC can only be claimed for certain wages. Avoid overclaiming by reviewing calculations and ensuring the correct wages are considered for each
period.
Supply Chain Issues: A supply chain disruption alone does not qualify a business for
the ERC. Verify that any supplier’s government order meets the required conditions.
Claims for Too Much
of a Tax Period: If your business operations were suspended for part of a quarter, you can only claim the ERC for wages paid during that suspension period, not the entire quarter.
Didn’t Pay Wages or Didn’t Exist During Eligibility Period: You can only claim the ERC for periods when you had employees and paid wages. Ensure your claims are for valid periods.
Promoter Says There’s Nothing to Lose: Be cautious of promoters who claimed you had nothing to lose by claiming the ERC. Incorrect claims can result in repayment, penalties, interest, audits, and other expenses.
What must you do?
If you suspect your business may have incorrectly claimed the ERC, I urge you to take immediate action. The IRS recommends pursuing the claim withdrawal process if your ERC claim has not yet been processed for any tax period.
For assistance, please consult with me, your trusted tax professional, to review your ERC claims.
Your compliance and peace of mind are my top priorities. If you have any questions or need further assistance, please do not hesitate to contact me.
Thanks,
Your favorite accountant
and tax professional,
Folasade,
(202) 618-1295
[email protected]
