Where financial and tax confusion exists, you’ll find scammers. Seniors are often targeted because they are confused by Social Security and Medicare regulations. Now, scammers are targeting businesses because of the increasing complexity of IRS regulations, including the Employee Retention Credit (ERC).
Many business owners and their financial advisors, including their accountants, have had difficulty unraveling and understanding the ERC. One of the first areas of concern has been its legitimacy and that of the companies promoting they can help businesses capitalize on this credit.
Is the Employee Retention Credit legitimate?
The Employee Retention Credit is a legitimate, refundable credit that eligible businesses can receive for having kept employees on their payrolls during the COVID-19 pandemic. The credit can be as high as $5,000 per employee in 2020 and $21,000 in 2021.
The key word in the description above is “eligible businesses.” What constitutes an eligible business is a complex topic that can’t be adequately covered here, but for most business owners, even reading about it can create confusion and anxiety.
Unfortunately, some bad actors have created companies profiting from the ERC’s complexity and padding their pockets at the expense of bewildered businesses. How can you avoid being a victim?
4 Ways to Avoid Scams with ERC Companies
To avoid being scammed by an ERC company, take these precautions:
1. Look for a contingency-based company.
When it comes to an ERC company helping you claim this credit, results are the name of the game. Beware of companies that approach you asking for an upfront fee of thousands of dollars to help you with the ERC.
Instead, work with a company that is paid only if they can help you receive what the IRS legally owes you concerning the ERC. Companies that charge a fee are often the type that take the money and run, leaving you with nothing to show for the money you gave them.
2. Check out their record of success and online reviews by past customers.
Before agreeing to hire an employee, you have them complete an application or read their resume because you want to know how they performed in the past.
It should be no different with an ERC company. Find out how many businesses they have enrolled in the program, the dollar amount of credits recovered for their client companies, and how many employees qualified.
In addition, check out their online reviews and ratings, including those on social media. While you’ll always find some negative reviews on any company, the majority should be extremely positive and detailed, including the names of employees that helped the reviewer.
3. Learn the standards to qualify for the ERC before signing an agreement.
At the very least, the ERC company you’re considering working with should be able to clearly explain to you how your eligibility to receive the Employee Retention Credit is determined.
Going into that conversation, be aware that:
- Applications are made for 2020 and the first three quarters of 2021.
- You must be a business that was restricted from doing business by statute, ordinance, or executive order.
- Alternatively, you must demonstrate your business suffered significant declines in revenue in these quarters.
This is just an overview of three parameters. Make sure the ERC company can fill them in with details (in writing).
4. Inquire about assistance with IRS audits.
A reputable, legitimate ERC company will, at a minimum, provide you with all the detailed documents you need if the IRS investigates your request for the ERC. Don’t expect them to be physically present at an in-person audit, but confirm in writing how they’ll support you if you are audited over the ERC.
Bottom Line Concepts offers legitimate ERC assistance.
Bottom Line Concepts is a no-risk, contingency-based company that helps businesses honestly and legitimately get the ERC they deserve. We have helped over 16,000 businesses enroll and recover almost $3 billion in credits.
Schedule your 15-minute no-cost, no-obligation call today to learn who we are and how we can help you with the Employee Retention Credit.