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Watch out for ERC Scams & Unreasonable Claims  

 

Greetings from Occams Advisory, the premium SMB specialist in Business Efficiency and Financial & Tax Advisory. 

 

In these pandemic-impacted times, every small- and midsize business deserves government support. You might have heard of Employee Retention Tax Credits (ERTCs). This is a refundable tax credit against employment taxes. To qualify, a business must establish that it faced either  

  1. Full or Partial Suspension of the Operation (FPSO) of their business during any calendar quarter because of governmental orders restricting business activity, travel, or group meetings as an impact of COVID-19, or 
  2. Significant decline in gross receipts during any calendar quarter of 2020 or 2021 compared to corresponding quarter in 2019, or meeting alternate quarter-based test. 

 

Qualification under either category is onerous and needs detailed documentation that can withstand potential IRS scrutiny and / or audit. The impact of governmental orders varied significantly depending upon location, type of industry and nature of services.  

 

You might be approached by providers, including many who sprang into existence specifically for this purpose, who claim that nearly every business qualifies for ERC, without adequate substantiation of how and why. This is an aggressive interpretation of the regulations and guidance and might not hold up to any detailed IRS scrutiny. A business’ qualification for ERC must be validated on a case-by-case basis with supporting research and legal review. 

 

BEWARE there are several fly by night companies pitching success-based fees for what they estimate your credit to be, creating a potential motive to be aggressive in their interpretations. IMPORTANT RED FLAGS include: 

  1. Establishing specific amounts without a thorough review of all the relevant information,
  2. Not seeking details of any change in business, or impact caused by government orders,
  3. Quoting overly generalized non-specific statute or guidance,
  4. Claiming that regulations or guidance provided by IRS ERC are incorrect,
  5. Failing to provide any assurance on defending their work in case of an IRS scrutiny, or
  6. Pretending association with established providers without proving link.  

 

Occams Advisory has been in business for 10 years and has worked with thousands of clients. Many publications including Inc magazine and Financial Times have recognized us for our rapid growth. We rely on high quality accounting due diligence, detailed research, and legal opinion from established law firms for qualifying our clients for ERC. Occams works in your best long-term interest and stands behind substantiation of work done by its high caliber professionals.