If you’ve found this page, chances are you’re doing some research about the Employee Retention Tax Credit (abbreviated ERC or ERTC). As you may have noticed, most posts on the subject talk about the same few things: what the credit is, how to qualify, and, most importantly, how much money you can make. You may even be a little skeptical.
Good! Skeptics are our best customers. You should be skeptical of baseless claims of easy money. And the more skeptical you are, the more we think you’ll appreciate our approach.
In a way, choosing an advisor to help obtain your company’s ERC is a choice between two extremes. At one extreme, your “regular guy” simply may not know about the ERC and its often arcane rules. Even if they’re smart and capable, you may end up leaving money on the table because this credit isn’t their specialty.
At the other extreme are some of the hyper-enthusiastic providers you may have heard from, usually unsolicited, in your email or social media. Here, your risk isn’t getting too little ERC but too much. Let’s quote from this excellent article in Forbes magazine:
“In those instances where we have seen tax credit firms provide overly optimistic advice, it has been in their interpretation of the suspension of operations test. Some of them take an extremely broad interpretation of that test and use its subjectivity as a sword.”
That is exactly right. For example, if you look closely at the IRS rules, rather than what various people say about them, you’ll see that the mere presence of a governmental order isn’t enough to qualify for the ERC. You also have to be able to explain how that order affected your business. And to do that, you need to know the rules in detail. Sometimes, as with a restaurant or retail store, it’s relatively simple: capacity limits significantly affected your business. Other times, if suppliers or travel or office closures are in play, there are other questions you need to ask.
Here are a few more quotes from that Forbes article. “When discussing with clients the advice they received from one of these shops, and whether it makes sense, we generally focus on the following questions:
– Did they identify a governmental order that limited the business’s commerce, travel, or group meetings due to COVID-19 – it is not enough to focus on the impact to the business; identification of the governmental order is a necessary first step in the analysis.
– Did they determine whether the effect on the business was more than nominal.
– Did they analyze whether the employees of the business were able to work comparably through telework (see Q&As #15-16).
If their advice is accurate, would it apply to every business in the country from March 13, 2020 through the end of Q3 2021, and if so, do you think that is what Congress intended? This last question give clients pause, because it forces them to focus on the big picture.”
We agree completely. At Spider ERC, we carefully document the exact governmental order – often state executive orders, but often coming from other sources – and provide you with a dossier of your claim so you can refer to it if you need to. We talk with our clients one-on-one to verify and document how the orders affected their businesses. And most importantly, we substantiate every claim we file. We carefully calculate your qualified wages, your PPP setoff, and, down to the day, the periods in which you qualify. And again, at the end of our work together, we provide you with all the data, so that you and your accountant have it on file.
Now, why are we telling you this? Because despite all the hype about the ERC, there’s also a lot of truth to it. The ERC is not a scam, but it’s not a simple windfall either. It’s a tax credit that effectively, and at times generously, compensates businesses and nonprofits who had W2 employers during the Covid-19 pandemic. The truth is: you’re not going to “get rich quick,” and if you file claims that aren’t backed up with evidence, you’re taking a risk. But if you work with someone who does their job diligently and with integrity, you can have a very successful outcome.
Naturally, we think we do exactly that. But feel free to look at our competitors’ sites too. We think that the more you see, the better we’ll look.