It seems about every two weeks something related to the Employee Retention Credit (ERC) is back in the news and is largely ignored by the public. The vast majority of valid claims have been filed and most of those have received their refunds. Those who are still paying attention to the ERC headlines are probably one of three individuals:
- A tax consultant (who oddly enough enjoys reading about this stuff);
- Someone who just realized that they do qualify (there still are a few of those); or
- An applicant who got tricked into “self-certifying” without even knowing it (and is now having trouble sleeping at night).
A Quick Recap of the ERC
In June, the IRS released guidance largely debunking the arguably most abused eligibility argument – the supply chain partial shutdown. Granted, those who are not interested in filing false claims already knew this, but it was helpful info, nonetheless.
Then in September, the IRS announced that they were going to stop processing new claims until at least 2024 in an attempt to halt the filing of fraudulent claims.
Fast forward to today, where the IRS announced a withdrawal process for taxpayers who are concerned about ineligible claims.
Undoubtedly, there are some out there who filed claims under the presumption that the consultant they were working with was the expert, which said expert then certified that the individual filing a claim should be the one to qualify. This is where the tricky self-certifying situation that was mentioned earlier comes into play. If someone who worked with one of these consultants goes back and reads their engagement letter (everyone reads those, right?), there’s a good possibility that there’s language in there stating something to the effect that the consultant is vouching for literally nothing – they’re simply taking the information that was provided, multiplying it by 50% for 2020 and 70% for 2021, and then telling their client to put some numbers on a 941X. If the client’s lucky, their “expert” consultant looked at $10k per employee limitations and PPP overlap, but there are some situations where even that is not happening. I even had an ERC mill personally insult me for pointing out that they had removed one month of gross receipts from a quarter-to-quarter comparison before sending the numbers back to the client to have them certify that the numbers were correct. Yes, it’s crazy.
McKonly & Asbury has helped countless clients file qualified ERC claims, and our Tax team is starting to review the ERC claims for applicants who are worried about their claim that was filed by another consultant. If you think you may have an issue, please don’t hesitate to contact us. We can review the documentation supporting eligibility along with the calculation. Guidance through the new withdrawal process can be provided for any problems our team finds. Even if it’s a ten-minute conversation to give you peace of mind, we’re happy to help.