We are writing to inform you about a crucial matter related to the Employee Retention Tax Credit (ERC). Please read this email carefully and take immediate action.
📢 Red Flags of Aggressive ERC Marketing
To protect your business and avoid unnecessary risks, watch out for the following warning signs:
- Aggressive Online/Offline Marketing: Deceptive ads, calls, texts.
- Fake Correspondence: Fraudulent IRS-like letters pressuring action.
- Incomplete Information: Misleading eligibility claims.
- Key Detail Omission: No wage deduction adjustments.
- PPP Considerations: Lack of clarity on PPP interactions.
📢 Avoiding Improper Claims
Promoters often push unjustified positions for ERC claims, including:
- Non-mandatory guidance from entities like CDC not qualifying as suspension orders.
- Increases in operational costs not aligning with IRS guidance.
- Shutdown orders targeting employer customers not meeting eligibility criteria.
- Voluntary shutdowns without a relevant governmental order.
- Misinterpretation of modification effects on business operations.
📢 IRS Enforcement and Potential Consequences
Please be aware that the IRS is actively stepping up enforcement actions against improper ERC claims. Taking aggressive positions without proper substantiation can lead to severe penalties, including but not limited to:
- Inaccuracy penalties (20%)
- Erroneous refund claim penalties (20%)
- Fraud penalties (75%)
- Evasion of employment taxes penalties (100%)
📢 Immediate Action Required
- Review any ERC claims your company has made or is considering.
- Ensure your claims align with IRS guidelines and are properly substantiated.
- Consult with a qualified tax professional.
Remember: Claims for the ERC must be accurate, well-documented, and adhere to IRS guidelines. Not fulfilling this obligation can have serious penalties and legal outcomes.
The deadline for adjustments to your 2020 ERC claims is April 15, 2024, and for 2021 claims, it’s April 15, 2025.