How to Prevent an IRS Audit of ERTC Funds
The Employee Retention Credit (ERC) has been an excellent resource for many businesses impacted by the pandemic. There’s been an influx of companies reaching out to small businesses offering assistance with ERTC. While these tax credits can seem like an easy way to get your business funding, due diligence is needed. There are two areas that employers need to be especially cautious: backing up their ERC claims and working with a reputable company.
Why you need to be careful
The IRS has provided guidance for the ERTC that can appear to have some grey areas. There’s been confusion over eligibility, especially regarding whether or not your operations were impacted by government restrictions related to COVID-19.
Because some guidance is open to interpretation, businesses and companies assisting businesses with employee retention credits may think they are safe making claims that are not clearly legitimate. But the IRS is likely to perform audits on these claims as the deadline for ERTC nears. This may result in fees, penalties, and the paying back of tax credits that didn’t qualify.
Avoid the headache and follow the guidance below so you can receive the ERC credits you actually qualify for.
Check your ERC eligibility for free
Check out our free interactive ertc eligibility calculator.
Back up your claims
If you didn’t experience the qualifying revenue drop for employee retention tax credits, you may still qualify. If you can prove your business operations were stopped or limited by government-mandated pandemic restrictions. Regardless of how you believe you qualify, make sure you have thorough and proper documentation. Have reports made by your accountant and keep your documents organized and easy to access in case of a future audit.
Be cautious of who you work with
Getting help with your ERC claim is highly advisable. However, you need to make sure you work with someone you can trust. Consultants or organizations that don’t have a strong background in tax or finance may not have the knowledge needed to check your eligibility and file a claim properly.
Since parts of the guidance from the IRS are open to interpretation, you need to work with a tax professional or trained accountant familiar with tax credits and programs. You want someone who is honest with you about eligibility and will work with you to have proper proof of making an ERTC claim. If you are audited, it will be you and your business on the line, not the company that helped you apply.
Pioneer Accounting Group is happy to help you find out if you are eligible for ERTC. We have helped hundreds of eligible businesses claim millions of dollars, and we have the testimonials to back it up. Fill out our eligibility form here and contact us today to get help you can trust.
Pioneer Accounting Group is all about inspiring and motivating positive changes to your business. However, consult your own accountant or tax professional for individual advise before making any business decision.
Learn more about our top-notch accounting services and how we help your business thrive, here.