Updated: Mar 2
The Employee Retention Credit (ERC) has been referred to as "one of the most lucrative tax credits," but the scams and misinformation surrounding this credit are shocking.
Is your phone ringing off the hook with ERC salespeople saying you are pre-approved for your government refund? The following are actual conversations with ERC “firms” who called me:
Call #1: There's No Sheriff In This Town
Me: If my claim is ever examined, will you provide a licensed attorney to represent me against the IRS?
SDR: Uhh, let me ask my supervisor… She says you would have to hire a tax attorney in that case.
Me: So that’s not included in your service?
SDR: Oh, no, we are just a processing center.
Call #2: Every Man For Himself
Me: If the IRS ever examines my claim, what audit support do you provide?
SDR: We’ll be here for you.
Me: What does that mean?
SDR: We can answer any questions you might have.
Me: So, you won’t actually represent me under audit?
SDR: Oh no, but you shouldn’t need that.
Call #3: The Lawman Isn't Our Concern
Me: What if the IRS ever questions or audits my claim, what will you do?
SDR: They should never do that if you are honest in the information you give us.
Me: But what if they do?
SDR: Uh, I don’t think they ever would question your claim, but I don’t work for the government, so I don’t know.
Wow! It’s the Wild, Wild West!
What We Know:
The IRS has been given 5 years to examine Employee Retention Credit claims.
What We Don’t Know:
We fully anticipate some percentage of ERC refunds will be audited over the next 5 years. With 87,000 new IRS enforcement officers being hired, that percentage could be as high as 10-20%, but no one knows for sure.
Try to stay out of prickly situations in ERC land, y’all!
Does your ERC provider include audit defense in their engagement? Are they ready to go toe-to-toe with the IRS to defend your claim? Do they have prior tax incentives examination and appeals experience? Do their fees include a licensed attorney ready to defend your claim? Is the “firm” even going to be around for the next 5 years to represent you?
If the answer to any of those questions is no, you might want to reconsider where you hitch your horse
With all the chaos, how can you confidently choose the right ERC firm? There are four questions I encourage anyone vetting out a potential Employee Retention Credit provider to ask. I would love to walk you through those questions!