Employee Retention Credit Filing Scams
You're facing the IRS's recent halt on new Employee Retention Credit claims, and it's throwing you for a loop. We've got your back. In this guide, we're breaking down what this freeze means for you, why it's happening, and how it affects your claims.
To truly understand the Employee Retention Credit moratorium in 2023, we will explore the following points:
- Did IRS stop processing ERC?
- Employee Retention Credit Moratorium 2023 Update
- Can I still apply for the ERC during the moratorium?
- IRS ERTC Moratorium
- ERTC tax credit fraud
We'll also delve into your options moving forward. So, don't sweat it. With our help, you'll navigate this new tax landscape like a pro.
Did IRS Stop Processing ERC?
You'll notice that the IRS has placed a moratorium on all new Employee Retention Tax Credit processing as a response to the surge in questionable claim submissions. This move is intended to halt the influx of potentially fraudulent claims and protect the integrity of the tax system.
The moratorium, announced on September 14, 2023, will remain in effect until the end of the year, at least. This implies that any new claims submitted during this period won't be processed until the moratorium is lifted. However, don't panic if you've already submitted your claim. The IRS will continue to process these claims, but at a slower pace due to detailed compliance reviews.
It's important to note that the moratorium was prompted by the IRS's recent regulations permitting the assessment and recapture of erroneous refunds of ERCs and other COVID-19 pandemic-related tax credits. The IRS is taking these steps to ensure that only eligible businesses benefit from the ERC, which was designed to provide financial relief to businesses impacted by the pandemic.
Despite the moratorium, you can still submit an ERC claim. But before you do, ensure that your business meets the eligibility criteria. This includes having paid qualified wages to employees and having experienced a government-mandated full or partial suspension of operations or a significant decline in gross receipts due to the pandemic. Always consult with a trusted tax professional before filing a claim to ensure compliance with IRS guidelines. Remember, improperly received ERC refunds must be repaid, possibly with penalties and interest.
Employee Retention Credit Moratorium 2023 Update
In light of the moratorium, it's crucial to understand the changes to the processing of Employee Retention Credit claims that will impact your business. The IRS has extended the standard processing goal from 90 days to 180 days for claims received before the moratorium. This means your business may face longer wait times for refunds from existing claims.
The increased scrutiny on ERC claims means that additional documentation may be requested by the IRS to validate the legitimacy of your claim. Be prepared for this possibility and ensure your records are in order.
There's also the potential for your claim to be audited, particularly if it's deemed high-risk. The IRS has initiated hundreds of criminal investigations related to fraudulent ERC claims, and the penalties can be severe. So, it's important that your claim is accurate and compliant with the tax laws.
If you've submitted a claim and wish to withdraw it, the IRS will provide details on how to do so. However, withdrawing a claim won't protect you if your claim is found to be fraudulent.
For businesses that haven't yet submitted a claim, consult with a tax professional to understand the eligibility requirements, prepare the necessary documentation, and ensure compliance with IRS guidelines.
Can I Still Apply for the ERC During the Moratorium?
While it's true that the IRS has put a halt on new ERC applications, you can still apply during the moratorium, but it's crucial to understand that processing times will be extensively longer. This is due to the IRS increasing compliance scrutiny to prevent fraudulent claims, which has resulted in longer wait times for refunds.
Even with the moratorium in place, you can submit your ERC claim if you meet the eligibility criteria. Primarily, you must have paid qualified wages to employees and experienced a government-mandated suspension or a significant decline in gross receipts. However, because of the heightened scrutiny, it's essential that you understand these eligibility requirements thoroughly and provide proper documentation to support your claim.
For instance, the definition of qualified wages depends on the size of your business in the 2020 and 2021 tax years. Moreover, the exact meaning of a significant decline in gross receipts differs for these tax years. To avoid errors, consult with a tax professional before filing a claim.
Withdrawing a previously submitted claim is also an option during the moratorium, but it won't protect those who filed fraudulent claims from potential investigation. The IRS is developing a program for taxpayers to repay erroneously received claims, which might help avoid penalties and future compliance action.
IRS ERTC Moratorium
Despite the complications brought about by the moratorium on the Employee Retention Credit, there's a wealth of information that you should be aware of to navigate this new landscape.
The IRS is focusing on claims received prior to the moratorium, and due to an increase in compliance review, processing times have extended from 90 days to potentially 180 days or more. Even with the moratorium in place, payouts for these claims will continue, albeit at a slower pace.
Despite the halt on processing new claims, you can still submit your ERC application during this period. However, it's essential to ensure that you're eligible for the credit before applying.
Here's what we know:
- Processing of claims:
- Claims received before the moratorium will continue to be processed.
- The processing time has extended to 180 days or more.
- The IRS has referred thousands of claims for audit.
- Payouts:
- Payouts for previously filed claims will continue during the moratorium.
- The payout period has extended to 180 days.
- Filing new claims:
- You can still submit an ERC claim during the moratorium.
- Ensure you're eligible before applying.
Eligibility revolves around paying qualified wages to employees, experiencing a government-mandated full or partial suspension, or seeing a significant decline in gross receipts. Details of these criteria may vary based on the tax year.
Understanding these changes will help ensure that your business navigates this complex situation effectively.
ERTC tax credit fraud - Why is this happening?
You're probably wondering about the reasons behind the implementation of this moratorium on Employee Retention Credit claims. The IRS has witnessed a surge in false claims, often instigated by unscrupulous promoters in ERC mills. These promoters promise to help businesses secure the credit, often for a contingency fee based on the credit size. The IRS aims to halt this fraudulent activity to protect both businesses and the integrity of the tax system.
The IRS is taking a firm stand against these fraudulent promoters - they've made it clear that improperly received ERC refunds must be repaid, along with potential penalties and interest. This is where the moratorium comes into play. By temporarily halting new ERC claims, the IRS can increase its scrutiny on compliance, ensuring that claims are legitimate and that businesses truly qualify for the credit.
The moratorium also allows the IRS to process existing claims more thoroughly. They're committed to examining each claim with meticulous detail, to root out any fraudulent activity and ensure that the credit is being awarded to businesses that genuinely qualify. This might mean longer processing times, but it's a necessary measure to prevent fraud and protect honest businesses.
Best ERC Filing Company
To save the trouble of vetting a reputable ERC filing company, ERC Specialists makes the process seamless and, most importantly, provides trustworthy, accountable, and transparent services.
If you decide to research a different company, it is important to remember to not be fooled by promises of quick returns, and always establish a six to eight-month time frame for the receipt of your ERC to avoid scams. With the IRS swamped with filings, receiving your credit earlier is unrealistic.
Here are four key steps to manage your expectations and avoid falling into ERC scams:
- **Understand the Process:** Be aware that the IRS is dealing with a high volume of ERC filings, causing delays.
- **Set Realistic Expectations:** Don't be swayed by promises of faster returns.
- **Do Your Research:** Verify the credibility of the firm you're dealing with.
- **Stay Informed:** Regularly check the official IRS website for updates on processing times.
Conclusion
Despite the challenges brought by the Employee Retention Credit moratorium, you're not alone. Understanding the changes, knowing your options, and seeking professional advice can help navigate these complexities.
Stay informed and proactive to ensure your business remains compliant and benefits optimally. With careful planning and expert guidance, you can continue steering your business confidently through this tax landscape, even amid uncertainties.
Remember, every challenge presents an opportunity for learning and growth.
How Long Does It Take To Get A Refund From Employee Retention Tax Credit?
It's often confusing to figure out how long it takes to get a refund from the Employee Retention Tax Credit (ERTC). But don't worry, we'll explain it in this article.
First of all, when you apply for ERTC, you need to provide certain documents and information that your accountant or tax preparer will use to complete the process. This might include things like quarterly wage statements or payroll reports.
After you have everything ready, it usually takes 2-3 weeks for the project to be completed and for an amended 941-x form to be issued. But keep in mind that these figures can vary depending on factors such as the complexity of the situation, your compliance history with taxes, or if any additional documentation is needed.
That said, you should always check with your accountant or tax preparer about their timeline so that you know exactly when you're likely to receive your refund. No matter what though, it's important to make sure that all of your paperwork is properly submitted and up-to-date – otherwise delays may occur and could affect when you get paid back!
Employee Retention Tax Credit Qualifications
The Employee Retention Tax Credit (ERTC) is a great way to help employers keep their employees even during tough times. To qualify for the credit, there are certain criteria that must be met.
Here's what you need to know:
* An employer must have had operations suspended due to COVID-19 or experienced a significant decrease in gross receipts.
* If an operation was shut down by government order, it counts as suspension of operations.
* If the business saw a drop in revenue over 2020 or the first three quarters of 2021, then this would count as a significant decline in gross receipts.
A new startup business could also qualify if they meet certain requirements in either the third or fourth quarter of 2021.
It's important to remember that not all businesses will be eligible for ERTC -- but those who do can receive up to $7,000 per employee! This money can really make a difference and help companies stay afloat while trying times pass. Plus, once qualified, employers don't have to wait until next tax season to get the funds - they can start claiming them right away.
Employee Retention Tax Credit 2023 Deadline
Now that we know the qualifications for the Employee Retention Tax Credit, let's move on to when it needs to be filed by.
The present deadline is April 15th, 2025.This means that if you are looking to apply for this credit during any of these years, make sure you do so before those dates.
It’s important to note that even though there are many opportunities throughout the year to apply for different tax credits or deductions, ERC only has a single filing window per year. So don't miss out! It’s also worth noting that applying late could mean that you won't qualify for the maximum amount possible.
When it comes down to it, making sure you take advantage of all available credits and deductions is essential when filing taxes - especially ones like ERC which have such a short window of opportunity each year. Keep an eye out and make sure not to miss deadlines or else you may end up losing out on some valuable savings.
Frequently Asked Questions
What is the Employee Rentention Credit (ERC)?
The Coronavirus Aid, Relief, and Economic Security Ac, signed into law on March 27, 2020, included two programs to assist businesses with keeping workers employe: Employee Retention Tax Credit (ERTC) administered by the Internal Revenue Service and the Payroll Protection Program (PPP) administered by the Small Business Administration.
How is ERC different from the Payroll Protection Program(PPP)?
PPP funds are not taxable as revenue and you may still take deductions for the payroll covered by PPP. The funds from the PPP are distributed based on 2.5 months of payroll and a minimum of 80% of the funds must be used on payroll to be eligible for forgiveness.
ERTC tax credits, however, are credits (or refunds) for a percentage of payroll in each quarter that you qualify. There are specific rules for determining eligibility by quarter, and limiting the dollars that can be claimed for each employee.
If I Received Funds from the PPP, Do I Still Qualify for the ERTC?
The short answer is “Yes”. You can claim ERTC even if you received PPP funds. In March of 2021, The American Rescue Plan Act of 2021 created expansions and modifications to existing criteria of Employee Retention Tax Credit.
Businesses that received PPP funds could now also claim ERTC tax credits. ERTC credits can be retroactively claimed for businesses that qualified in 2020. The ERTC qualification period was extended through 9/30/21 with lower eligibility requirements.
The refundable credit amount increased from 50% of qualifying wages in 2020 to 70% in 2021. The per-employee cap on qualifying wages was increased from $10,000 for all of 2020 to $10,000 per quarter for the first 3 quarters of 2021.
How Do I Apply for the Employee Renention Tax Credit and My CPA Do This?
Unlike the Payroll Protection Program, there is technically no application process for the Employee Retention Tax Credits. You would simply claim the ERTC tax credit like any other tax credit by asserting to the IRS that you can legally claim the credit.
Whether your tax accountant is a CPA or EA, they most likely only prepare Federal and State Income Tax Returns. However, ERTC credits are claimed against Employment Taxes on Form 941, and cash advanced through Form 7200.
The ERTC program is quite complex, which one of the main reasons most CPA's do not mention or attempt the claim process. It is also the reason most businesses pursued the PPP loan instead.
For prior quarters, you must file an amended form (the Form 941-X) to reduce your current quarter’s tax contribution. Also, you must request a refund of excess credits.
ERC Specialists provide a focused and dedicated service for processing ERC claims exclusively. Most business CPAs reach out to ERC Specialists for their Employee Retention Tax Credit claim needs. Click the button below to access the secure LINQQs portal to qualify and get your claim started before this plan expires. This provides audit protection and peace of mind.
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