How can I tell if my ERC vendor is the right one for me?

Legit or Not. How can you tell?

You’ve probably been getting those calls. From numbers you don’t recognize. The voicemail from someone telling you how much you can get from the government in pandemic relief just because you own a business. “Don’t miss out on up to $26,000 per person!” they say.

You don’t recognize the voice. You don’t know the name. All you hear is a promise of getting something for nothing. Sort of.

It sounds like a great opportunity. Twenty-six thousand per employee can add up to a big chunk of change after all. But is it legit?

How can you tell which vendors are shady and which vendors are legitimate?

Our advice… start asking questions. And look for good answers.

Experience

When working with tax specialists who are making filings on your behalf, it’s important to ask about their experience. Yes, it’s true the ERC program is new and has even evolved over that short time. However, the vendor you choose to work with should have a thorough accounting and tax policy background. And they should be able to give you examples of the types of businesses and industries they’ve worked in as well as testimonials from satisfied clients. More on this later.

Eligibility

Perhaps the most important aspect of the ERC process is establishing and verifying your eligibility for the benefit. If it turns out later that you weren’t eligible or your eligibility comes into question otherwise, it can be a serious issue for you. We recognize this as one of the most important aspects of the entire process and spend appropriate time and energy on helping you discover if you fit the program.

Disclosure

Legitimate ERC providers will inform their clients of the need to account for the ERC on their income taxes. They should tell you that when your checks arrive, you’ll want to inform your CPA or tax preparer. According to the IRS memo IR-2022-193, October 19, 2022, “If the business filed an income tax return deducting qualified wages before it filed an employment tax return claiming the credit, the business should file an amended income tax return to correct any overstated wage deduction.”

Fair Fees  and Agreements

The amounts of money that companies charge for ERC filings vary widely. But there is one thing to watch out for in an ERC vendor, and that is upfront fees charged BEFORE analysis. If a company promises large refunds and wants you to pay them and sign a contract before they have done any analysis or discovery about your company, that is a red flag. Reputable vendors do the work FIRST and then allow business owners to find out the amount of their ERC credits before making any payments and signing any agreements.

Coloring Within the Lines

The ERC is a federal program that requires communication with and filings to the IRS. And for experts in the field who have successfully helped long lists of clients navigate the process, it isn’t an overly arduous effort, but for independent business owners and vendors without that experience, it can be challenging to keep up with all the required IRS notices and revenue reporting procedures. If you ask, the vendor you’re considering should be able to give you a detailed, step-by-step of everything that’s required by the IRS, required of you, and estimated timelines and deadline expectations. Surprise is not a word you want to hear from anyone as you navigate this process. We’ve actually seen many customers whose accounting departments and outside accounting firms have recommended working with an ERC expert for just these reasons.

Have You Received PPP Funds?

ERC eligibility was modified fairly recently to allow businesses that filed under and received PPP funds to also take advantage of this program. But the accounting for these businesses, while not difficult, is specific. PPP wages are excluded from consideration under the ERC program, and any vendor you’re considering should know this and be able to explain it to you in detail.

IRS Interaction

Ask the vendors you’re considering working with, “what happens if?” If the IRS audits your ERC application? What if the IRS asks for more information? What if months or more down the road, the IRS wants to look at the original documentation? Any reputable vendor should be able to commit to:

Keeping all documentation on file for required periods

Being available to communicate or meet with the IRS on your behalf if necessary

Being able to provide answers to any questions even after the application is approved and funds received

Basically, your ERC vendor should back their own work 100 percent.

Reviews

Your vendor should not only be able to provide you with multiple good reviews and testimonials from their satisfied clients but should be happy about getting the question. Any vendor who balks at providing information like this should be possibly shady. We’re all happy to share tales of our successes in whatever industry we work in. Your vendor should be no different.

These are just a few of the questions you should ask before engaging an ERC expert to handle your application and filing. Don’t be shy about asking. Don’t question it if they can’t give you the answers and evidence you’re asking for.

This will position you in the most positive way when beginning the ERC process.