Have you been contacted by a third party and advised that your business is eligible for the Employee Retention Credit? If so, proceed with caution… Many businesses are being advised to claim the credit, but don’t actually qualify for it.

Often, these third parties will charge a large fee upfront or a fee based on the refund amount. In return, they advise you that your business qualifies without doing a proper review or they calculate the deduction incorrectly. Either way, you could be paying for a service you don’t need.

What is the ERC?

It’s a refundable tax credit against certain payroll taxes for businesses that continued paying employees while shut down as a result of the COVID-19 pandemic.

How do I know if my business qualifies?

To be eligible for the credit, an employer must meet one of the following conditions:

  • Sustained a full or partial suspension of operations as a result of the orders issued from appropriate governmental authority.
  • Experienced a significant decrease in gross receipts from March 13, 2020 until December 31, 2021.

How do I know the third party that contacted me is legit?

The ERC has been a beneficial program for those that qualify, however, claiming the credit if you aren’t eligible can be costly – for you not the third party that advised you to claim it – so it’s important to determine if the third party and claim are legit. Here are some tips…

  1. Confirm the company is registered with the IRS.
  2. Ask for references from previous clients that received the credit with their successful filing.
  3. Be sure you understand the process to qualify before you sign the contract.
  4. Ask if the third party provides audit protection.
  5. Before they file on your behalf, request actual proof that your business qualifies.

Before you make your decision to proceed with a third party, check in with your accountant.

Have questions? Contact us today!