Can Businesses Avoid the FOMO Trap When It Comes to the ERTC?
Are you eligible for the ERTC? The answer might not be obvious with so much unreliable information circulating on social media. Some business owners file for this credit without ensuring they’re eligible because of the fear of missing out, a.k.a. FOMO. Doing this could land you in trouble with the IRS.
When you consider claiming the ERTC, don’t succumb to FOMO. Rather, check whether or not you qualify and work with a reputable tax professional to present a watertight claim.
Why FOMO Is a Risk With ERTC Claims
Under the ERTC, you could claim tens of thousands of dollars for every employee you retained while COVID disrupted your business. Maybe you see other companies in your industry enjoying a big cash boost thanks to this credit. Moreover, various services encourage businesses to claim the ERTC refund before it’s too late: “Hurry and file! There are only a few months left!”
Because of FOMO, many employers either claim the ERTC while they are ineligible for the credit or include non-qualifying wages in their tax refund calculations. This doesn’t always mean intentional tax fraud. Honest business owners can make mistakes or hire a disreputable tax service to handle their ERTC claim.
The IRS Cracks Down on Illegitimate Claims
In September of 2023, the IRS put all new ERTC claims on hold to deal with a backlog of pending claims. The processing of new claims should resume in 2024, with extra resources invested in checking each case.
The IRS puts extra effort into this screening process because of an avalanche of incorrect and fraudulent applications. If you hurry to file but claim the ERTC when your business isn’t eligible or state the wrong amount, the IRS may reject your claim. Your business could also face an IRS audit, potential penalties, and, in some cases, even criminal proceedings.
Are You Eligible?
When you consider filing the ERTC, don’t fear missing out. Instead, save yourself time and energy by revising eligibility requirements.
In a nutshell, you may qualify for this tax credit if either of the following applies to your company:
- Government orders made you stop or significantly slow down your work during the pandemic
- Your gross receipts suffered a substantial decline (50% or more in 2020, 20% or more in 2021) compared to similar quarters in 2019
If you apply for the credit, you must know exactly how much you may claim. For example, majority owner wages usually don’t count toward the ERTC. Wages you paid using PPP funds are also ineligible.
How to Choose a Trusted Tax Advisor for the ERTC
As a company leader, you shouldn’t let yourself fall into the FOMO trap when making business decisions. The surest way to avoid this pitfall with the ERTC is to work with a trusted tax lawyer or advisor. A tax professional can let you know whether you’re eligible for the ERTC and how much you may claim.
Choose a trusted firm that takes the time to look into your company’s financial background, carefully checks your records to ensure your claim is legitimate, and helps you gather supporting documents like employee forms, income tax returns, and sales and revenue logs.
Not Sure Whether You Can Claim the ERTC? Call Dayes Law Firm
If you doubt whether you may claim the ERTC, don’t fear missing out. Contact us at Dayes Law Firm, and let our skilled tax lawyer run an eligibility check for you.
If you qualify for this tax credit, we can help you calculate the amount you may claim and walk you through filing your amended tax return. Call 800-503-2000 or contact us online for a free consultation.