You’ve claimed the Employee Retention Credit (ERC), but how do you know it was calculated and filed correctly? We will assess your ERC filing and provide you with peace of mind.
Scioto Mile – Columbus
Royse Partners can review your previously filed ERC claims to ensure they align with IRS guidelines for qualification, quantification, and substantiation.
The Employee Retention Credit (ERC) is a federal payroll tax credit that Congress enacted to help businesses keep workers employed through the worst parts of the COVID-19 Pandemic. The ERC has the potential to provide eligible taxpayers with refundable credits of up to $5,000 per employee for payroll periods in 2020, and up to $28,000 per employee for payroll periods in 2021.
With such high dollar credits at stake, many business owners pursued the ERC. Unfortunately, not all of their claims are valid. The IRS has seen an influx of incorrectly filed ERC claims initiated by third parties, so much so that the Service added the ERC claims to its annual Dirty Dozen list of tax scams in 2023.
Here’s what’s happening:
Some third parties have been aggressively marketing the ability to help taxpayers file ERC claims. These parties advertise to nearly all businesses indiscriminately, even the ones that likely aren’t eligible. In some egregious cases, third-party promoters of the ERC will encourage taxpayers to take improper or unsubstantiated tax positions, when determining eligibility for the credit or how much to claim.
These schemes are common, and the IRS encourages businesses to “be cautious of advertised schemes and direct solicitations promising tax savings that are too good to be true.” Businesses with incorrect ERC filings will not only have to potentially repay the credits if audited, but could also be subject to interest and significant penalties.
At Royse, we are aware that some unscrupulous third-party promoters are targeting business owners, and we want to help. We offer a streamlined process to assess not only whether your business was the target of one of these scams, but also assists in finding solutions if your filing is incorrect. Here is our process:
Not all ERC studies are correctly completed. The IRS has seen an influx of incorrectly filed ERC claims that have been prepared by third parties. Although these third parties typically claim to have calculated your ERC correctly, that may not be the case. Qualifying for the ERC is not a simple process, and third parties that aggressively market the ERC to businesses often take shortcuts in their calculations to inflate ERC claims and receive higher fees. In a forensic review, we uncover these incorrect calculations and work with you to fix them.
If we believe any previous calculations were incorrect, we will likely recommend performing a new ERC study for your business. During this study, we can recalculate the full ERC amount your business is entitled to and recommend a tax professional to amend your claim(s). We can connect you with accounting and/or legal professionals that can assist your business’s unique situation and take appropriate action to any third party that may have failed to fulfill its duties.
During our forensic review process, we will first begin by asking you broad questions about the prior ERC study, how your business qualified, and how your credit was calculated. If we believe your claim is incorrect, we will further investigate to identify any errors. Depending on the outcome, we may recommend a new ERC study with Royse. In this study, we will not only recalculate the credit, but we will also provide a detailed substantiation report for the new claim(s). This report can be utilized in the event of an IRS Inquiry and can provide peace of mind that your claims not only follow the letter of the law, but also align with IRS guidance.
The IRS publishes a list of the 12 most common scams they anticipate taxpayers might encounter throughout the year. The Dirty Dozen list is intended to help taxpayers avoid fraud, but it also indicates which tax positions could be flagged for further attention.
The IRS added the ERC to the Dirty Dozen list for 2023 as they have become aware of ERC schemes from third-party promoters. The IRS believes many of these promoters are misleading businesses into believing they are eligible for a credit when, in many cases, the taxpayers are not.
Contact us today for a no-cost consultation.