Claiming the Employee Retention Tax Credit

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Has your business been receiving calls about your eligibility to receive large sums of money from the government because you qualify for the “ERTC” (Employee Retention Tax Credit)? Are you wondering if these calls are legit? They might sound plausible since the government has been handing out money like candy in connection with the COVID pandemic for the last two years. And, actually, the ERTC is a very real government assistance program that was part of the CARES Act of 2020. So, those calls you are getting do refer to a legitimate government program. But watch out. There probably is a scam in there somewhere.

What is the Scam?

A plethora of ERTC “shops” have sprung up across the country. They are offering their services to help businesses claim the ERTC – for which they will collect a hefty commission.  Those companies that are scamming businesses, are making the claims based on circumstances that DO NOT APPLY under the requirements of the Act. 

Note: The IRS does not vet claims when they are filed. So, if the IRS pays your claim, then audits you and finds the claim is fraudulent, you are in deep trouble and the ERTC shop has already pocketed its commission. 

How Do You File A Legitimate Claim?

As one of the top accounting firms in Franklin TN, we know that the requirements of the Act are nearly as complicated as the entire IRS tax code. This is partially true due to four subsequent Acts in 2021 that changed or expanded the requirements. Just as an example, there are different requirements for businesses that:

  • started up during the pandemic
  • have more than 100 full-time employees
  • received PPP loans 
  • have more than 500 full-time employees
  • received Shuttered Venue Operators Grants or Restaurant Revitalization Funds
  • have  gross receipts in the third quarter of 2021 that were less than 10% of the receipts in the 3rd quarter of 2020 or 2019.
  • and the list goes on!

So, making an ERTC claim is not a job for amateurs. If you think that your business might qualify for the ERTC, our advice is don’t trust one of these ERTC shops. Consult with your professional CPA. Please call PHB CPA’s if you have any questions about this or other questions about business tax filing in Franklin, TN.