Update as of September 20, 2023
Due to the recent moratorium on Employee Retention Credit (ERC) filings by the IRS, actions may be needed to validate your claims. Contact us today to determine the best next steps for your organization.
The Employee Retention Credit (ERC) has become a vital financial lifeline for small to medium-sized businesses, offering crucial support in the wake of economic challenges.
Designed to encourage employers to keep employees on the payroll, the ERC can make a substantial difference in a company’s fiscal health. However, this very importance has attracted the attention of fraudsters, leading to a surge in ERC-related scams. Unscrupulous individuals and entities prey on vulnerable businesses, turning what should be a benefit into a potential pitfall.
It has never been more essential to understand the ERC, how it works, and how to navigate the complex landscape of legitimate claims and fraudulent schemes. In this post, we will explore the ERC, uncover the types of fraud that business owners should be aware of, and highlight how experts like Percipio Business Advisors can be your first line of defense in safeguarding against fraud.
Types of ERC Scams Business Owners Should Be Aware Of
Fraudulent activities related to the ERC can take many forms, and being informed about common schemes can be your first line of defense. Here are some of the typical scams that target business owners:
- Misrepresentation of Eligibility: Some scams involve providing false information or manipulating data to claim the ERC unlawfully, potentially leading businesses into legal trouble.
- Fake Advisory Services: Scammers may pose as professional ERC consultants, offering assistance in claiming the ERC, but ultimately stealing sensitive information or charging exorbitant fees without providing actual services.
- Broker Scams: Scammers acting as middlemen promise to facilitate ERC claims for a fee, only to disappear once they’ve received payment, leaving businesses without any assistance.
These varied scams underscore the necessity of vigilance and professional guidance when pursuing the ERC. Knowledge is power, and understanding these fraudulent tactics can help protect your business from becoming a victim.
Methods of ERC Fraud: A Closer Look
The fraudulent schemes related to ERC are unfortunately sophisticated and often tailored to exploit unsuspecting business owners. Let’s dig into some of how fraudsters will try to get the upper hand:
- Improper Claims: Assisting companies with filing large, improper claims, in an attempt to earn the fraudster a higher fee based on a company’s size of tax credit.
- High-Pressure Tactics: Employing aggressive sales techniques or scare tactics, pressuring businesses to act quickly, thus hindering due diligence and rational decision-making.
- Collaborative Scams: Working with unscrupulous tax preparers or other business professionals to orchestrate large-scale fraud, involving multiple parties.
- False Documentation: Creating fake tax forms or employment records to wrongfully claim the ERC or assist others in doing so.
- Online Misdirection: Using legitimate-looking websites, emails, or social media pages to mimic official entities, luring victims into sharing personal or financial details.
Understanding the methods employed in ERC fraud offers businesses an essential insight into the underlying risks. Awareness, coupled with professional guidance like that provided by Percipio Business Advisors, can be the shield that keeps your business secure from these complex and malicious activities.
How to Avoid ERC Scams: The Role of Experts
Be wary of unsolicited contacts, such as unexpected emails or calls offering ERC assistance. Authentic government agencies and professionals typically do not approach businesses this way. Instead, consult trusted experts, working with established and reputable tax professionals, like Percipio Business Advisors, to ensure that you receive accurate information and assistance.
Educate yourself and your staff about the ERC, its requirements, and common scams. Knowledge is a powerful tool against fraud, and training your team to recognize potential fraud can further safeguard your business.
If you encounter or suspect fraudulent activities, report them to the appropriate authorities. Doing so can help protect other businesses and contribute to the apprehension of scammers.
Proper Steps to Obtain the ERC for Eligible Businesses
The ERC can be a significant boon for eligible businesses, but it’s vital to follow the correct procedures to secure this credit.
First, understanding the specific eligibility criteria is paramount. These may include factors related to the number of employees, pandemic-related business interruptions, wage thresholds, employee count thresholds, other COVID-related assistance received, among others.
Next, it’s crucial to gather all relevant documents, including payroll records and financial statements, to demonstrate eligibility. Careful attention to detail will ensure that your application accurately reflects your qualifications.
Once your documentation is prepared, working with a specialized ERC expert can be invaluable. Professionals like Percipio Business Advisors have in-depth knowledge of the ERC process and can guide you through the intricacies, reducing the risk of errors and maximizing your credit.
After filing, regular follow-ups with the relevant authorities may be necessary to track the status of your application and address any queries or clarifications.
Why Choose Percipio Business Advisors: Your Path to Success
Working with reliable and professional tax and ERC experts like Percipio Business Advisors can streamline the process and ensure proper qualification. Fraudulent ERC practices are rampant, and it’s imperative to take the most effective steps to protect yourself, your organization, your employees, and your customers.
Percipio Business Advisors stands ready to assist businesses in navigating these changes and ensuring compliance with the constantly evolving regulations. With expert guidance, business owners can confidently pursue the ERC without fear of fraud or missteps.
Get started by checking your ERC eligibility with us today!
Questions? Contact one of our CPAs today!
Justin Niederklein, CPA
Vice President
jniederklein@percipiobusiness.com
402-630-2971
Nick Burianek, CPA
Vice President
nburianek@percipiobusiness.com
402-630-2971