There have been many recent news stories on how the IRS is cracking down on businesses claiming Employee Retention Tax Credits (ERTCs) based on improper positions related to eligibility requirements and credit calculations.
On October 21st, the IRS issued a press release warning employers to be wary of third parties (i.e., credit mills and boutique firms) who are advising employers to claim the ERTC when they may not qualify. TV and radio ads from these third-parties can be heard all day, every day, promoting ERTC services. Businesses are overwhelmed with emails from these third-parties urging employers to claim the ERTC.
The Tronconi Segarra & Associates COVID-19 Response Team, which has been working on behalf of our clients with regard to a wide range of COVID-19 relief matters since early 2020 when the pandemic was first declared, speaks with clients and other businesses on a weekly basis who have been approached or solicited by one of these third parties and told they qualify for the ERTC because their business was partially suspended or because of supplier shortages.
Unlike what these third parties appear to be telling businesses, there are many factors that go into determining (1) whether a business qualifies for the ERTC, and (2) the computation of the credits – if they qualify. No third party can tell you that your business qualifies for ERTCs without taking many factors (including whether a governmental entity ordered your business/industry sector to close during COVID-19, your businesses’ gross receipts, size, ownership, wages, and PPP loans) into consideration first. It is important to understand that the ERTC is actually quite complex, and a business should not simply trust a third party that is promising them $26,000 per employee in tax credits.
As a result of our experience working through these complexities on behalf of a significant number of clients who we have assisted in determining their ERTC qualification, we have the expertise to assist additional businesses wondering whether they might legitimately qualify for the ERTC. We are happy to discuss your specific situation with you and help determine whether you qualify for the ERTC.
Please contact the COVID-19 Response team at 716-633-1373 or firstname.lastname@example.org.