What is the ERTC? It stands for the Employee Retention Tax Credit and it's designed to help small businesses recover the funds they used to keep workers employed during the pandemic
The amount can be substantial - you've probably seen those commercials that you're entitled to 26k per employee right?
As with most things involving large chunks of money there's a lot of fraud surrounding the ERTC
But one of the largest fraud schemes involves the tax professionals and firms assisting small businesses.... here's how they're doing it
A lot of firms are claiming ALL businesses qualify - and that's just not true ⚠️
They're filing claims for every business that comes to them and then they're charging a 20% fee for their payment
The issue is a lot of these small businesses do not qualify. And those firms are not providing adequate documentation of qualification. So these small business owners are out 20% of the credit in fees, and when they're audited they'll have to pay the credit back along with penalties and interest. All while the ERTC firm gets 20% of what the credit was calculated to be
So how exactly do you qualify? There's 3 general qualifying events. All 3 require that actual W2 wages were paid to employees. The business most likely qualifies if:
✅️ The business was partially or fully shut down by a government order
✅️ The business experienced a reduction in gross receipts as defined in the ERTC Regulations
✅️ The business was a recovery start up business
Now there's a few other ways that a business may qualify - or be disqualified even if it meets the above guidelines
So if you know your business got the ERTC... but you don't know how you qualified... and you're worried you may have fallen into one of these ERTC fraud schemes what should you do?
First ask for documentation on how you qualified from your ERTC firm. Does the documentation support one of the main qualifiers? If not what supporting documentation did they provide for a different qualification? And does it abide by the ERTC regulations?
If not we need to talk... you can go back and fix the issue if need be. And get to it before the IRS does now that they are auditing ERTC claims. I can walk you through your qualifications - or disqualifications. So you can have the peace of mind you need.
And so you can seek a refund of that 20% fee for the fraudulent claim before that ERTC firm closes it's doors for good and leaves you high and dry