In IR-2023-49, the Internal Revenue Service (IRS) gave further warnings about promoter claims involving the Employee Retention Credit (ERC) and added that tax credit to the list commonly referred to by the IRS as the Dirty Dozen.
The IRS is specially concerned with the promoters conning employers into filing for this tax credit when they are ineligible to claim the credit. The claims were made based upon dubious claims about supply chain issues versus the actual rules for claiming the tax credit.
The credit has only three criteria to determine if you qualify:
1. Orders from an appropriate governmental authority
2. Significant decline in gross receipts during 2020 or a decline in gross receipts during the first three quarters of 2021
3. Qualified as a recovery startup business for the third and fourth quarters of 2021
The rules are more complicated in individual circumstances, so it is best to have a competent tax professional familiar with the rules to analyze your situation. We will tell you why you qualify or do not qualify for the tax credit.
If you have questions regarding this tax credit, please contact us at John B Lane CPA.