The Employee Retention Credit (“ERC”), also known as the Employee Retention Tax Credit (“ERTC”), presents a refundable tax credit opportunity tailored for businesses and tax-exempt entities. The criteria for eligibility vary based on the specific timeframe during which the credit is sought.
Due to an influx of ERC promoters that uses different tactics to mislead people claiming that they are eligible for the ERC the IRS has released additional guidance on what to look out for to avoid any surprises. Below are just a few examples of signs that indicates aggressive ERC marketing from a promotor.
- Statements that the promoter or company can determine ERC eligibility within minutes.
- Large upfront fees to claim the credit.
- Fees based on a percentage of the refund amount of Employee Retention Credit claimed. This is a similar warning sign for average taxpayers, who should always avoid a tax preparer basing their fee on the size of the refund.
- Preparers refusing to sign the ERC return being filed by the business, exposing just the taxpayer claiming the credit to risk.
In addition, additional information regarding eligibility, qualifying orders, recordkeeping, etc… are also available on the IRS FAQ page.