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| 1 minute read

Don't Apply for an ERC Credit Just Because the Radio Said You Should.

If you listen to the radio at all, you've heard about the Employee Retention Credit, and how easy it is to claim.  Don't believe the hype.  The IRS has started to show a heightened focus on Employee Retention Credit (ERC) claims, and it's important for businesses to be aware of this development. In recent times, there have been increased enforcement efforts by the IRS in this area, and it's likely that more audits and inquiries will be conducted in the future.

Firstly, it's essential to note that the ERC is not available for every business. Despite the advertisements promoting its benefits, many businesses do not qualify for this credit, even if they managed to retain employees throughout the pandemic. It is crucial to seek advice from an accountant or tax advisor you trust to determine if your business is eligible for the ERC. It is advisable not to "shop around" for advice, as the nuances of qualifying for the credit can be complex, and it's important to have a professional who understands your specific situation.

If your business does qualify for the ERC, it's crucial to ensure that you have proper documentation and records to support your claim. Maintaining accurate records that demonstrate the eligibility criteria and the calculations used to determine the credit amount is vital. This includes documenting the number of full-time employees, wages paid, and eligible expenses.

Given the increased enforcement focus on ERC claims, it's prudent to be proactive in reviewing your eligibility and ensuring compliance with the requirements. A CPA or trustworthy tax preparer can help you work through the requirements and assemble the documentation needed to survive IRS scrutiny. 

The IRS is starting to intensify its scrutiny of ERC claims, and businesses should be prepared for potential audits or inquiries. Understanding the eligibility criteria, seeking professional advice, and maintaining accurate records are key steps to take in order to navigate this evolving enforcement landscape. Stay informed, and ensure your business is compliant to avoid any unexpected knocks on the door from the IRS.

Remember, it's always best to consult with a qualified accountant or tax advisor who can provide personalized guidance based on your specific circumstances.

We are beginning to see the early signs of a strong IRS enforcement focus on ERC claims. The knocks on the door will come.