The employee retention credit (ERC) started out slow but keeps going strong, even to the present day. When it was first enacted on March 27, 2020 as part of the CARES Act, it received little fanfare because taxpayers that received a forgivable loan under the paycheck protection program (PPP) were prohibited from claiming the ERC. When that prohibition was lifted nine months later by the Consolidated Appropriations Act, 2021, claims for the ERC exploded. Then, Congress added fuel to the fire and kept making the rules more generous as time went on.
One unfortunate side effect of the ERC explosion has been that numerous tax credit companies are out there offering dubious advice in exchange for outsize fees. Be especially wary of the ones that overstate their credentials or ability to provide advice regarding the ERC. Some claim to have received special training from the IRS (they have not) and others claim to have special knowledge regarding the law for one reason or another (they do not – detailed information about the ERC is available to anyone with an internet connection). One company claims that its ideas are “proprietary” and refuses to discuss them in front of outside advisors.
The written advice some of these companies provide to their clients is lacking. We have seen instances where a company provides the same boilerplate tax memo to multiple clients, notwithstanding that the clients were engaged in different businesses and their eligibility depended on different...
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