In recent years, there has been an increase in companies offering to help businesses apply for the Employee Retention Credit (ERC). While the ERC is a legitimate tax credit that can provide real tax refund checks to companies across the country, there are many illegitimate “ERC” factories that advise companies to apply for credits to which they may not be entitled. It is important to do your research before hiring any company that claims to help you apply for the ERC. The ERC was created to encourage businesses to keep their employees on their payrolls during difficult times.
Eligible taxpayers can apply for the ERC on an original or amended employment tax return for a period within certain dates. However, claiming the ERC without documented evidence can leave you vulnerable in a future IRS audit, especially if the amount of your ERC refund is in the millions. Neil Johnson, a tax professional from the Chicago metropolitan area, believes that “a sense of unease about high inflation and recession can make small business owners attractive targets” for employee retention tax credit scams. If you find yourself in this situation, you can report the information to the IRS using information reference form 3949-A.
It is important to make sure you understand all of the steps needed to meet the requirements before signing a contract with a company, especially since they will be paid a percentage of your money for their services. An experienced advisor who can provide reliable information on multiple tax credits and support your claims in a future audit is essential.
