Employee Retention Credit Filing Scams
You're wise to explore the Employee Retention Credit (ERC) to offset pandemic losses. But watch out! Scammers are preying on business owners like you, promising quick ERC cash. Don't bite.
Unsolicited calls, hefty fees, and claims outside of tax returns scream scam. Arm yourself with accurate info, double-check credentials, and stay safe from these ERC scams.
To better understand how to identify and protect yourself from ERC filing scams, it is crucial to cover the following points:
- Is ERC Legit?
- Is the IRS warning about ERC?
- 3 Employee retention credit scams that require your attention
- Legitimate ERC companies
- 5 Ways to avoid ERC scams
- Inquire regarding defense against IRS audits
- Does the company finance the credit prior to its receipt?
Is ERC Legit?
In light of the information on Employee Retention Credit (ERC) and its scams, you may be wondering, 'Is ERC legit?' The answer is a resounding yes. The ERC is indeed a legitimate refundable tax credit. It was specifically designed to aid employers who were financially affected by the pandemic in 2020 and 2021. However, it's crucial you're aware of third-party ERC scams that could put you at risk of non-compliance with tax laws.
You might be eligible for the ERC if your business was shut down or impacted financially due to the pandemic. Yet, you should tread carefully. The Internal Revenue Service (IRS) has issued warnings about scams related to the ERC. Crafty fraudsters encourage ineligible businesses to claim the credit, often charging exorbitant fees for the service.
Claiming the ERC improperly can have serious consequences, including the requirement to repay the credit, along with penalties and interest. Therefore, it's crucial to ensure your eligibility before claiming the ERC. Engage trusted tax professionals to guide you through the process and ensure you're compliant with all requirements.
Avoid falling prey to scams where fraudsters claim you can receive the ERC outside of your federal tax return - this isn't true. Be cautious of any unsolicited advice or offers related to the ERC, especially from sources promising quick and easy money. Be vigilant, work with trustworthy tax professionals, and refer to the IRS for accurate information about the ERC. In this way, you can legitimately benefit from the ERC while avoiding scams and unnecessary risk.
Is the IRS Warning about ERC?
Yes, the IRS is indeed issuing warnings about ERC scams, and you need to be vigilant to avoid falling prey to these fraudulent activities.
As a business owner, it's important to recognize that scams related to the Employee Retention Credit (ERC) are on the rise. The IRS is cautioning employers about third-party scammers encouraging ineligible businesses to claim the ERC, often charging hefty fees for unnecessary services.
Scammers exploit the complexity of the ERC process, making false promises about claiming the credit outside of your federal tax return. This is simply not true, and succumbing to such scams could lead to severe penalties, including repayment requirements with interest.
It's vital to recognize that the only legitimate assistance should come from trusted tax professionals or attorneys. They can guide you through the process and ensure compliance with the tax laws. Be wary of unsolicited offers related to the ERC. Often, these are signs of potential scams aiming to exploit your business's financial vulnerabilities.
Remember, the IRS doesn't initiate contact via email, social media, or phone calls. Official communication usually comes through traditional mail. Protect your sensitive information and refrain from sharing details such as Social Security numbers, bank account details, or login credentials with unknown sources.
Staying informed about the latest IRS warnings and adopting a proactive approach can help you avoid falling victim to these scams. Always check the credentials of tax professionals before engaging their services, and understand the ERC requirements before agreeing to anything. Your vigilance is a key step in safeguarding your business.
3 Employee Retention Credit Scams that Require Your Attention
You need to be aware of the various types of Employee Retention Credit (ERC) scams that are prevalent today. These mainly include:
- Phone call scams
- Collection scams
- Identity theft scams
Employee Retention Credit Phone Calls
Beware of the employee retention credit phone call scam, one of the most frequent and potentially damaging scams that can put your business at risk. To safeguard your business, take note of the following:
- **Understand the scam**: Fraudsters, posing as tax consultants, convince businesses to claim the ERC improperly and charge hefty fees for their services.
- **Recognize red flags**: Unusual urgency, promises of guaranteed refunds, and payment demands upfront are all suspicious signs.
- **Verify information**: Always cross-check the details provided in the phone call with the official IRS guidelines.
- **Report the scam**: If you encounter such a scam, report it to the appropriate authorities immediately.
ERC Collection Scam
Navigating through ERC collection scams involves being aware of fraudsters who file ERC claims on your behalf, only to pocket a significant portion of your credit. They often prey on your lack of knowledge surrounding the ERC process. Keep in mind, if you're eligible for an ERC, you don't need a third party to file the necessary 941-X forms for you.
These scams often lead to tax compliance risks and may result in penalties and interests if the ERC is claimed improperly. Always work with trusted tax professionals and ensure you understand the full requirements and implications of filing for an ERC. Be cautious of anyone promising significant returns or expedited services.
Protect your business by staying informed and proactive against these collection scams.
ERC Scam Involving Identity Theft
Identity theft is a sophisticated form of ERC scam, and it's one that can lead to substantial financial harm if you're not careful. Scammers solicit sensitive information from ineligible businesses, then fraudulently apply for the credit using this stolen identity.
To guard against this:
- Never give out sensitive information to unsolicited third-party requests.
- Regularly monitor your financial accounts for any suspicious activity.
- Alert the IRS if you suspect your business identity has been used fraudulently.
- Work with trusted, verified tax professionals when seeking assistance with ERC claims.
Legitimate ERC Companies
To protect yourself from fraudulent filings from unscrupulous companies, it is crucial that you enlist a qualified ERC filing company that focuses solely on this specific tax credit. ERC Specialists is an experienced payroll tax company made up of former IRS agents and financial experts with decades of combined knowledge. This company’s advisory board members is also former state and national attorney generals. There is no ‘cooking of the books’ with ERC Specialists.
Simply click the link here to get started with a quick qualification form hosted by LINQQs. Once the initial form and documentation are completed, LINQQs will transfer these documents to ERC Specialists for accurate and speedy processing.
It should be noted, that despite the temporary Employee Retention Credit Pause by the IRS, LINQQ’s and ERC Specialists continue to submit files and assist businesses in applying for the Employee Retention Credit. This will ensure that their clients will be at the front of the line when processing resumes. The program is still active, and the IRS is still accepting ERC submissions.
5 Ways to Avoid ERC Scams
To safeguard against ERC scams, it's essential to engage trusted tax professionals who understand the complexities of ERC. Ensure you confirm both your eligibility for ERC and the firm's credentials before proceeding.
Always insist on personal communication and understand thoroughly the ERC requirements and the payment structure for the company's services.
Work with trusted tax professionals
Why wouldn't you consider working with trusted tax professionals to help navigate the complexities of the Employee Retention Credit and avoid falling victim to scams? Here are four compelling reasons:
- **Expertise**: Tax professionals have the necessary knowledge and experience to guide you through the intricate ERC landscape.
- **Familiarity with IRS Procedures**: They understand the IRS's filing processes, which lowers your risk of making costly mistakes.
- **Fraud Prevention**: Tax professionals are aware of prevalent scams and can guard your business against them.
- **Audit Support**: In case of an IRS audit, a reputable tax professional can provide much-needed assistance.
Don't rely on unsolicited advice. Instead, proactively seek the help of a trusted tax professional to ensure your ERC claims are legitimate and compliant.
Confirm ERC Eligibility and the firm's credentials
Before you dive into the ERC process, you should confirm both your business's eligibility for the credit and the authenticity of any firm you're considering working with, as this can save you from potential scams and financial pitfalls.
Start by understanding the specific eligibility requirements for ERC, which can be found on the IRS's official website.
Then, scrutinize the credentials of the tax firm. They should be able to discuss their tax credentials openly and share their success rate in resolving ERC cases. If they're evasive or lack transparency, consider that a red flag.
Remember, legitimate tax professionals will be forthcoming about their experience, expertise, and credentials, and should be willing to walk you through the complexity of the ERC process.
Staying vigilant in this way can help you avoid falling prey to ERC scams.
Understand the ERC requirements before agreeing to anything
While you're eager to take advantage of the ERC, it's crucial that you fully understand its requirements and your own eligibility before you agree to any offers or sign any documents.
- **Know your business status:** Ensure your business was either completely or partially suspended by a governmental authority or experienced a significant decline in gross receipts.
- **Understand FICA wages:** You must continue to pay FICA wages and file quarterly 941s during the applicable financial quarters.
- **Confirm your eligibility:** Be confident about your eligibility to protect yourself from scams. Seek professional advice if needed.
- **Involve a trusted tax professional:** They can help you accurately determine your eligibility and guide you through the filing process.
Understanding these points will help you avoid ERC scams.
Insist on personal communication
In the fight against ERC scams, you should insist on at least two forms of personal communication with your tax advisor, and don't settle for emails or text messages alone. It's crucial to have direct phone conversations or even in-person meetings when possible.
This allows for detailed discussions about your company's eligibility and the specific requirements of the ERC. Furthermore, personal communication can help you gauge the professionalism and reliability of your tax advisor.
Be wary of advisors who are unreachable, evade your questions, or rush you into claiming the credit. Remember, ERC scams often employ aggressive marketing tactics and work to hook as many takers as possible.
Delve into how the company's services are paid
You'll want to delve into how a company's services are paid for, and it's essential to remember that legitimate tax professionals don't base their fees on a percentage of your credit.
Here's a four-step guide to help you avoid falling into ERC scams:
- **Understand the Payment Structure:** Legitimate tax attorneys charge based on set payment schedules, not on a contingency basis.
- **Avoid Percentage-Based Fees:** If a firm charges a percentage of your credit, it's a red flag.
- **Verify Credentials:** Ensure the firm or individual you're working with is a trusted tax professional.
- **Ask Questions:** Don't shy away from asking about their fee structure, defense against IRS audits, and realistic time frames for credit receipt.
Inquire Regarding Defense Against IRS Audits
It's crucial that you ask about the tax professional's experience in defending against IRS audits and ensure they have a solid record of successful cases. Remember, the IRS is actively auditing and conducting criminal investigations related to false ERC claims.
If you're working with a professional who's experienced in dealing with these audits, it'll provide a layer of protection for your business. Knowledgeable tax professionals can guide you through the process, help you understand the complex regulations, and ensure your filings are accurate and compliant.
If an audit does occur, they should be able to represent you effectively. Be wary of anyone who can't provide this assurance. Your business's financial security is too important to risk on an inexperienced or unqualified professional.
Does the Company Finance the Credit Prior to Its Receipt?
As you navigate the complexities of the Employee Retention Credit (ERC), it's crucial to be vigilant about potential scams. Ensuring the credibility of tax professionals offering assistance can be a critical step in this process.
To help, ask prospective tax professionals key questions such as:
- How long have you been in the business tax industry?
- Is the ERC the only tax credit you address?
- Do you provide supporting documentation in the face of an audit?
- What percentage of your clients qualify for the ERC?
How long have you been in the business tax industry?
You're seeking a tax professional with significant industry longevity to navigate the complex landscape of Employee Retention Credit, so always ask, 'How long have you been in the business tax industry?'
Evaluate their years of experience: A seasoned professional will have a comprehensive understanding of tax laws and regulations.
Check their previous work: Find out if they've handled cases related to Employee Retention Credit and how they performed.
Look at their reputation: Check online reviews and ratings, and ask for references from previous clients.
Consider their credentials: Ensure they're certified tax professionals and members of reputable tax associations.
Do you provide supporting documentation in the face of an audit?
Before signing on with a tax professional, it's critical that you ask whether they'll provide supporting documentation during an audit, and if they don't, it's time to walk away.
- **Complete Transparency:** A reputable tax professional will ensure all transactions and claims are transparent, providing necessary documents whenever required.
- **Audit Defense:** They should be capable of defending your claim during an audit, necessitating an in-depth understanding of tax laws and the Employee Retention Credit.
- **Record Keeping:** They must maintain proper records of your filings, which can be a lifesaver during an audit.
- **Ethical Practices:** The professional should follow ethical practices, ensuring your business stays compliant with tax laws, and reducing the risk of audits and penalties.
What percentage of your clients qualify for the ERC?
Don't forget to ask about the percentage of their clients who actually qualify for the ERC, as this can highlight potential red flags and help you steer clear of scams. If the firm you're considering quotes a high percentage, it's a clear sign that something's not right.
Remember, only businesses meeting stringent IRS requirements qualify for the ERC. An unusually high qualification rate could indicate the firm isn't adhering to these requirements, potentially leading to compliance issues. This could result in your business facing repayment requirements, penalties, and interest.
Trust your instincts and do your due diligence. If a deal seems too good to be true, it probably is. Always work with trusted tax professionals to ensure you're navigating the ERC process correctly.
Best ERC Company
To save the trouble of vetting a reputable ERC filing company, ERC Specialists makes the process seamless and, most importantly, provides trustworthy, accountable, and transparent services.
If you decide to research a different company, it is important to remember to not be fooled by promises of quick returns, and always establish a six to eight-month time frame for the receipt of your ERC to avoid scams. With the IRS swamped with filings, receiving your credit earlier is unrealistic.
Here are four key steps to manage your expectations and avoid falling into ERC scams:
- **Understand the Process:** Be aware that the IRS is dealing with a high volume of ERC filings, causing delays.
- **Set Realistic Expectations:** Don't be swayed by promises of faster returns.
- **Do Your Research:** Verify the credibility of the firm you're dealing with.
- **Stay Informed:** Regularly check the official IRS website for updates on processing times.
Conclusion
Don't fall prey to ERC scams. Remember, legitimate claims are made through federal tax returns, not third parties. Watch for red flags like unsolicited calls, excessive fees, and false promises. Work with trusted, verified tax professionals.
Stay informed, ask questions, and keep your business safe. As the IRS warns, vigilance is key. Your business's financial health depends on your caution.
Let's keep those hard-earned dollars where they belong - in your business.
How Long Does It Take To Get A Refund From Employee Retention Tax Credit?
It's often confusing to figure out how long it takes to get a refund from the Employee Retention Tax Credit (ERTC). But don't worry, we'll explain it in this article.
First of all, when you apply for ERTC, you need to provide certain documents and information that your accountant or tax preparer will use to complete the process. This might include things like quarterly wage statements or payroll reports.
After you have everything ready, it usually takes 2-3 weeks for the project to be completed and for an amended 941-x form to be issued. But keep in mind that these figures can vary depending on factors such as the complexity of the situation, your compliance history with taxes, or if any additional documentation is needed.
That said, you should always check with your accountant or tax preparer about their timeline so that you know exactly when you're likely to receive your refund. No matter what though, it's important to make sure that all of your paperwork is properly submitted and up-to-date – otherwise delays may occur and could affect when you get paid back!
Employee Retention Tax Credit Qualifications
The Employee Retention Tax Credit (ERTC) is a great way to help employers keep their employees even during tough times. To qualify for the credit, there are certain criteria that must be met.
Here's what you need to know:
* An employer must have had operations suspended due to COVID-19 or experienced a significant decrease in gross receipts.
* If an operation was shut down by government order, it counts as suspension of operations.
* If the business saw a drop in revenue over 2020 or the first three quarters of 2021, then this would count as a significant decline in gross receipts.
A new startup business could also qualify if they meet certain requirements in either the third or fourth quarter of 2021.
It's important to remember that not all businesses will be eligible for ERTC -- but those who do can receive up to $7,000 per employee! This money can really make a difference and help companies stay afloat while trying times pass. Plus, once qualified, employers don't have to wait until next tax season to get the funds - they can start claiming them right away.
Employee Retention Tax Credit 2023 Deadline
Now that we know the qualifications for the Employee Retention Tax Credit, let's move on to when it needs to be filed by.
The present deadline is April 15th, 2025.This means that if you are looking to apply for this credit during any of these years, make sure you do so before those dates.
It’s important to note that even though there are many opportunities throughout the year to apply for different tax credits or deductions, ERC only has a single filing window per year. So don't miss out! It’s also worth noting that applying late could mean that you won't qualify for the maximum amount possible.
When it comes down to it, making sure you take advantage of all available credits and deductions is essential when filing taxes - especially ones like ERC which have such a short window of opportunity each year. Keep an eye out and make sure not to miss deadlines or else you may end up losing out on some valuable savings.
Frequently Asked Questions
What is the Employee Rentention Credit (ERC)?
The Coronavirus Aid, Relief, and Economic Security Ac, signed into law on March 27, 2020, included two programs to assist businesses with keeping workers employe: Employee Retention Tax Credit (ERTC) administered by the Internal Revenue Service and the Payroll Protection Program (PPP) administered by the Small Business Administration.
How is ERC different from the Payroll Protection Program(PPP)?
PPP funds are not taxable as revenue and you may still take deductions for the payroll covered by PPP. The funds from the PPP are distributed based on 2.5 months of payroll and a minimum of 80% of the funds must be used on payroll to be eligible for forgiveness.
ERTC tax credits, however, are credits (or refunds) for a percentage of payroll in each quarter that you qualify. There are specific rules for determining eligibility by quarter, and limiting the dollars that can be claimed for each employee.
If I Received Funds from the PPP, Do I Still Qualify for the ERTC?
The short answer is “Yes”. You can claim ERTC even if you received PPP funds. In March of 2021, The American Rescue Plan Act of 2021 created expansions and modifications to existing criteria of Employee Retention Tax Credit.
Businesses that received PPP funds could now also claim ERTC tax credits. ERTC credits can be retroactively claimed for businesses that qualified in 2020. The ERTC qualification period was extended through 9/30/21 with lower eligibility requirements.
The refundable credit amount increased from 50% of qualifying wages in 2020 to 70% in 2021. The per-employee cap on qualifying wages was increased from $10,000 for all of 2020 to $10,000 per quarter for the first 3 quarters of 2021.
How Do I Apply for the Employee Renention Tax Credit and My CPA Do This?
Unlike the Payroll Protection Program, there is technically no application process for the Employee Retention Tax Credits. You would simply claim the ERTC tax credit like any other tax credit by asserting to the IRS that you can legally claim the credit.
Whether your tax accountant is a CPA or EA, they most likely only prepare Federal and State Income Tax Returns. However, ERTC credits are claimed against Employment Taxes on Form 941, and cash advanced through Form 7200.
The ERTC program is quite complex, which one of the main reasons most CPA's do not mention or attempt the claim process. It is also the reason most businesses pursued the PPP loan instead.
For prior quarters, you must file an amended form (the Form 941-X) to reduce your current quarter’s tax contribution. Also, you must request a refund of excess credits.
ERC Specialists provide a focused and dedicated service for processing ERC claims exclusively. Most business CPAs reach out to ERC Specialists for their Employee Retention Tax Credit claim needs. Click the button below to access the secure LINQQs portal to qualify and get your claim started before this plan expires. This provides audit protection and peace of mind.
Click the button below to start your claim