The Employee Retention Credit (ERC) has been a crucial support for businesses during the COVID-19 pandemic, providing much-needed financial relief. However, as the March 22 deadline approaches, the Internal Revenue Service (IRS) has raised concerns about misleading information and incorrect claims being promoted. Businesses are urged to review their ERC claims for any suspicious signs that could indicate inaccuracies and to take advantage of special IRS programs to correct them.
Claiming Too Many Quarters: It’s uncommon for businesses to qualify for the ERC in all available quarters. Review your eligibility for each quarter carefully to ensure accuracy.
Misinterpreting Government Orders: Not all government orders qualify for the ERC. Your operations must have been directly affected by a COVID-19-related government order to be eligible. Generic narratives about government orders should be avoided.
Inaccurate Employee Count and Calculations: Be cautious about claiming the ERC for all wages paid to every employee. The eligibility criteria and credit amounts changed throughout 2020 and 2021. Review all calculations to avoid overclaiming the credit.
Citing Supply Chain Issues: Qualifying for the ERC based solely on supply chain disruptions is rare. Ensure that any supply chain issues meet the specific requirements for ERC eligibility.
Overstating the Eligible Tax Period: It’s possible to qualify for the ERC for an entire calendar quarter, but only if your business operations were affected for that entire duration. Claims should accurately reflect the suspension period.
Claiming ERC Without Paying Wages or Before Business Existence: You can only claim the ERC for periods when you paid wages to employees. Claims for periods before your business had an employer identification number or when no employees were on payroll are incorrect.
Promises of No Risk: Be wary of promoters who claim there’s nothing to lose by claiming the ERC. Incorrect claims can lead to repayment, penalties, interest, audits, and other expenses.
To avoid potential compliance issues and future IRS actions, businesses are encouraged to seek the help of a trusted tax professional and explore the special programs offered by the IRS, including the ERC Voluntary Disclosure Program and the claim withdrawal process. Time is running out, and taking proactive steps now can help ensure that your business remains in good standing with the IRS.
As the deadline swiftly approaches, it’s paramount for businesses to scrutinize their Employee Retention Credit claims, ensuring they align with IRS guidelines. Remember, the ERC represents not just a lifeline during turbulent times but a testament to your resilience and commitment to your team. By heeding the warning signs of incorrect claims and embracing the opportunity for correction, you’re taking a proactive step towards safeguarding your business’s financial health and integrity. With expert guidance from IncenCred, you can navigate this process with assurance, making the most of the benefits you rightfully deserve. Let’s tackle this together, ensuring your business continues to thrive in a post-pandemic world with confidence and compliance.
For more detailed information or assistance with your ERC claim, contact the IncenCred compliance team at anshul@incencred.com. We’re here to help you navigate the complexities of the ERC and ensure your business stays compliant.
If you’re unsure about your Employee Retention Credit (ERC) claim or concerned about potential IRS audits, don’t wait until it’s too late. Reach out to the IncenCred compliance team today. Our experts are here to review your ERC eligibility and help you navigate the complexities of compliance. Shield your business from IRS audits and ensure your claim is accurate.
Contact us at anshul@incencred.com for a thorough review of your ERC eligibility and peace of mind.
This blog provides general information intended for educational purposes only and should not be considered as legal, financial, or tax advice. The specifics of the Employee Retention Credit (ERC) and related compliance issues are subject to change based on IRS guidelines and regulations. Businesses are encouraged to consult with a qualified tax professional to ensure accuracy in their ERC claims and compliance with current IRS requirements. IncenCred assumes no responsibility for errors or omissions in this content or for actions taken based on this information.
1. What is the Employee Retention Credit (ERC)?
– The ERC is a refundable tax credit designed to encourage employers to keep employees on their payroll during the COVID-19 pandemic. It’s available for wages paid after March 12, 2020, and before January 1, 2022.
2. How do I know if my business is eligible for the ERC?
– Your business may be eligible if it experienced a significant decline in gross receipts or was fully or partially suspended due to government orders related to COVID-19. Specific eligibility criteria vary for different periods.
3. Can I claim the ERC if I received a Paycheck Protection Program (PPP) loan?
– Yes, but you cannot claim the ERC for the same wages used for PPP loan forgiveness. You need to ensure there is no double-dipping.
4. What are the key deadlines for claiming the ERC?
– The IRS has set a special deadline of March 22, 2024, for employers to correct improper ERC claims through the ERC Voluntary Disclosure Program. It’s crucial to review your claim and make any necessary corrections before this date.
5. What should I do if I suspect my ERC claim might be incorrect?
– If you’re concerned about the accuracy of your ERC claim, reach out to the IncenCred compliance team at info@IncenCred.com. Our experts can review your claim and help you make any necessary corrections to avoid potential penalties and interest.
6. What is the ERC Voluntary Disclosure Program?
– This is a special program offered by the IRS that allows employers to correct improper ERC claims at a sharp discount. By applying to this program by the March 22 deadline, employers can avoid penalties and interest on incorrect claims.
7. Can I withdraw my ERC claim if it’s still pending?
– Yes, the IRS offers a special claim withdrawal process for businesses with pending ERC claims. This allows you to withdraw your claim with no strings attached, helping you avoid future compliance issues.
8. How can IncenCred help with my Employee Retention Credit (ERC) claim?
– IncenCred’s compliance team specializes in ERC eligibility review and compliance. We can help you:
– Assess your eligibility for the ERC, ensuring you meet the necessary criteria.
– Identify any potential errors or red flags in your existing claim that could trigger an IRS audit.
– Provide guidance on correcting any inaccuracies in your claim, including navigating the ERC Voluntary Disclosure Program.
– Assist with the withdrawal process for pending ERC claims, if needed.
– Offer expert advice on maximizing your ERC benefits while staying compliant with IRS regulations.
At IncenCred, we unravel tax complexities with unmatched expertise. From challenging IRS disputes to international tax intricacies and comprehensive accounting, our proven track record establishes us as leaders in tax consulting. We’re your partners in clarity, strategy, and success.