FORT LAUDERDALE, Fla., Oct. 23, 2023 - In today's climate, the Employee Retention Credit (ERC), a payroll refund from the Internal Revenue Service (IRS), stands as a valuable resource for businesses and a financial lifeline for many. However, the ERC has become a subject of persistent scrutiny due to the prevalence of fraudulent claims and service providers that use aggressive and predatory tactics (so-called "ERC mills").
On September 14th 2023, the IRS made a significant announcement, introducing a temporary moratorium, or halt, on the processing of ERC claims submitted on or after that date. This moratorium will remain in effect until at least January 2024, with existing claims received by the IRS before September 14, 2023, continuing to be processed, albeit at a slower pace. This move by the IRS aims to bolster protective measures, curtail potential abuse, and shield well-intentioned business owners from ERC mills.
On the accounting side, the ERC legislation includes complex rules on aggregation as well as PPP and ERC interaction, which requires an experienced tax advisor or Certified Public Accountant (CPA). On the legal side, you need seasoned attorneys to pull state and local orders and interpret how they may have applied to your business through a facts and circumstances-based analysis. Given the complex nature of the credit eligibility and accounting required, there are many businesses that may have filed ineligible or incorrect claims. The ramifications of filing an ineligible or incorrect ERC claim, whether knowingly or unknowingly, can be both punitive and formidable. These consequences may include the obligation to repay the credit, incurring interest charges, financial penalties, and in some cases, even criminal liability.
If you think you have worked with an ERC mill or an inexperienced provider, you should consider having an ERC expert take a second look at your claim.
In a recent statement on the Grow Money podcast, EZ-ERC CEO Kenneth Dettman, CPA, provided insights into the evolving landscape of ERC audits. He noted that while audits are underway, they have yet to reach a massive scale. Based on what the experts at EZ-ERC have seen, two primary areas of focus have emerged: (i) improper reliance on the partial suspension of operations test of eligibility; and (ii) large employer credits, enabling sizable corporations (i.e., over 500 full-time employees in 2019) to claim credits for wages paid to employees during periods of non-work. Unfortunately, the ERC space has witnessed significant misuse in both areas. Nevertheless, auditors themselves are grappling with the nuances of these newly emerging regulations, making it challenging to predict the precise parameters of enforcement.
Fortunately, the IRS has announced forthcoming initiatives to aid victims of unscrupulous and unqualified ERC service providers through an amnesty program. This program will enable affected parties to rectify inappropriate claims or repay ERC funds they should not have received.
Whether you need a qualified advisor to substantiate your ERC claim or defend against a potential or active ERC audit, the guidance of seasoned professionals, namely CPAs and tax attorneys, is indispensable. A team of experts at EZ-ERC can navigate you through the intricate process of eligibility or represent you under an IRS audit.
At EZ-ERC, we take pride in offering comprehensive Audit Defense services. Our confidence stems from our profound understanding of the tax code and ERC regulations. We encourage you to reach out to one of our advisors today to explore how we can assist you or your clients in a current or potential ERC audit or through a review of previously filed claims to ensure any eligibility and the corresponding calculation was correct and accurate.
Author: Kenneth Dettman, CPA, CEO of EZ-ERC
PR Contact: pr@ez-erc.com
EZ-ERC distinguishes itself as a firm operated and managed by licensed, credentialed, and highly experienced tax professionals and attorneys. With decades of practical experience in tax advisory and accounting, EZ-ERC's experts are deeply involved in every client engagement, from inception to filing, and beyond.
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