Important information from the Bronx Tax Man!
There are many scammers on social media and emailing small business owners. Most of these are law firms claiming they know the loop holes and will help you get money. However the laws are clear cut, either you qualify or you don’t. The IRS will be conducting audits on the small businesses who attempt to submit claims. The appealing thing is that small businesses (if they qualify) can obtain up to $26,000 per employee for the qualified affected periods.
The basic rule for the Credit says that as a business your sales MUST have DECREASE 50% from 2019 to 2020 or 20% from 2019 to 2021 for the same quarter in question. For example 1st QTR (January through March) 2019 to 2020. If your sales did not decrease, then you most likely do not qualify.
Another requirement is if the small business had obtain the PPP (Payroll Protection Program) the payroll that was used in those grants cannot once again qualify for the ERC. Therefore, once audited, those small businesses will be responsible to pay back any credit received. The other negative aspect is that unlike the PPP, the Employee Retention Credit causes a domino effect whereas the small business will have to file amended payroll taxes, amended corporate taxes to reduce the payroll for the qualifying year, and if an S-Corp or LLC, will then also have to file amended personal taxes to increase their income for that year. All of these consequences are never mentioned.
Furthermore, if the solicitation company who assist the small business to obtain the supposed ERC credit takes a fee of 25% or so, you have no guarantees that if you are audited and owe these funds back to the IRS, that they will be in business to refund you the fees they took from you.
This is quickly becoming one of the biggest scams hitting small businesses across America. Unfortunately, until the Internal Revenue Service completes there audits, the world will not know the negative consequence that these scamming companies are causing.
Below is a link to the IRS website explaining more details. However small business owners Beware of these scammers who make the ERC so appealing that you feel like a fool if you do not apply.
There is so much more that can be said about this credit and the scams, but the small business community should be on high alert for these scammers making these deals so sweet and appealing before you are left footing the bill and facing audit consequences for years to come.
https://www.irs.gov/…/irs-issues-renewed-warning-on…
