Seven Signs of Incorrect Employee Retention Credit (ERC) Claims

man stamping rejection

Understanding the nuances of the Employee Retention Credit (ERC) can be overwhelming. At SaveMyERC, we’re here to clarify these complexities and help your business move forward with confidence.

Recent IRS guidelines have highlighted several red flags indicating when an ERC claim might not be accurate. Let’s break down these warning signs and explore how partnering with an ERC consultant can help ensure your claim is compliant.

1. Claiming ERC for Multiple Quarters Unnecessarily

It’s rare for a business to qualify for ERC across all available quarters. The IRS has observed that some promoters overzealously encourage businesses to claim for more quarters than they’re eligible for.

Proper examination of each quarter’s eligibility is essential. At SaveMyERC, we specialize in ensuring that your claims are legitimate.

2. Misinterpretation of Government Orders

Only specific government orders related to COVID-19 that led to a full or partial suspension of operations qualify for the ERC. Misleading information about qualifying based on any government order, including informal guidance or OSHA communications, can lead to incorrect claims.

SaveMyERC helps you navigate these rules, ensuring that your claims are based on accurate and IRS-approved criteria.

3. Over-claiming Due to Employee Count or Calculation Errors

The ERC’s intricacies, including dollar limits and eligible wages, vary between tax periods. Over-claiming by not adhering to these specifics or applying uniform credit amounts across different periods can jeopardize your claim.

Our experts are adept at crunching these numbers correctly to validate that your claim is both accurate and optimized.

4. Supply Chain Disruptions as a Basis for ERC

Qualifying for ERC solely on supply chain disruptions is not common. If such disruptions lead to a significant decline in your company’s ability to operate or generate revenue, they may contribute to the overall case for ERC eligibility.

However, the disruption itself, without a direct link to a government order affecting the business’s operations or a significant decline in gross receipts, is not enough to qualify.

5. Claiming ERC for Extended Periods Without Justification

Claiming ERC for an entire quarter without continuous government-ordered suspension is another common mistake. If an audit reveals that a claim was exaggerated, your business may have to repay the credit along with potential penalties and interest. This financial repercussion can be a significant setback.

6. Ineligibility Due to Lack of Wages Paid or Existence

ERC claims are valid only for periods when wages were paid and for businesses operational during the eligibility period. Our review process helps confirm the legitimacy of your claim, ensuring that your business’s existence and payroll during the claimed period are well-documented and compliant with IRS requirements.

7. Misleading Promises of Risk-Free Claims

Beware of promoters who claim there’s nothing to lose in filing an ERC claim. Incorrect claims can result in repayments, penalties, and more. The IRS offers tools like the ERC Eligibility Checklist to help determine potential eligibility.

However, using these tools and applying their findings can be complex. That’s where SaveMyERC comes in. Our goal is to ensure that your ERC claim is compliant while maximizing the benefits rightfully available to your business.

The Value of Expert Guidance

Working with an ERC consultant like SaveMyERC helps provide organizations with expert analysis and guidance. Here’s how working with our team can make a difference:

  • Detailed review of government orders: SaveMyERC helps businesses understand the specifics of relevant government orders and their actual impact on operations. This understanding is crucial for determining the eligible periods for ERC claims.
  • Accurate calculation of qualifying wages: By accurately identifying the affected periods, you can be confident that only the wages paid during those times are claimed.
  • ERC audit support: In the event of an IRS audit, we’ll provide support by helping your company prepare and present the necessary documentation to substantiate your ERC claims.
  • Maximizing legitimate claims: We’ll help prevent over-claiming while also ensuring that your business fully uses the available credits during the qualified periods.

Partner with a Trusted ERC Claim Consultant

Understanding these seven signs of potential ERC claim inaccuracies can save your business from costly mistakes. Partnering with our experts means placing your trust in a team dedicated to ensuring your claim’s success, backed by a proven track record of excellence.

Reach out today to explore how we can support your business.