We have seen an increase in outside boutique accounting firms approaching clients stating that they qualify for the Employee Retention Credit (ERC). If you’re contacted by one of these boutique firms, we urge you to be especially cautious when considering these offers. These firms are promising sizeable refunds and work on a contingent fee. In most cases, these firms are taking an aggressive approach and grossly overestimating the returns, leaving your business high and dry.
Qualifying for the ERC is not that simple. The reality is that the guidance we have related to the partial shutdown test is not clear-cut and will be subject to interpretation based on facts and circumstances. The IRS is aware of firms pushing the limits of the credit, so we expect an increase in IRS scrutiny and audits as a result.
There is no urgency to file at this time. The statute for filing amended 2020 payroll returns is open until April 15, 2024, and April 15, 2025, for 2021 returns so we have some time to act. If you have already been contacted by someone, or you have already entered into an agreement, please reach out to your Rea advisor to discuss your specific situation.
Have additional questions? Contact our experts at Rea & Associates.
By Lesley Mast, CPA, MAcc – Taxation (Wooster office)