The Relief Consultants Blog

Tag: Ertc Tax Credit

  • IRS Announces New Tool to Combat ERC Fraud

    IRS Announces New Tool to Combat ERC Fraud

    Greetings, ladies and gentlemen. I am the CEO of The Relief Consultants, and today, I am pleased to share some exciting news with you. Before we dive into it, let’s delve into the IRS’ new tool to combat ERC fraud.

    Opportunistic Actors and the Complex ERC Program

    The IRS has recently introduced a new capability that allows businesses to withdraw their Employee Retention Credit (ERC) claims. Now, you might be wondering why such a provision exists. Well, it’s because of a group we’ll call ‘opportunistic actors’ — these are the folks who often inundate business owners with incessant direct mailers and bothersome phone calls. What’s noteworthy is that these ‘opportunistic actors’ occasionally went to great lengths, including a complete disregard for the program’s requirements, to intentionally over-qualify clients for the ERC. Crafty, isn’t it?

    Now, here’s the deal: The ERC is one tricky program. It’s like trying to solve a puzzle made of tax codes and government rules. You really need to know your stuff to navigate it correctly.

    Introducing The Relief Consultants’ Qualification Matrix

    So, in light of the IRS’s announcement, we’ve got some exciting news of our own. At The Relief Consultants, we take the ERC seriously. We’ve been helping our clients with government grants and tax programs for the past three years, and in 2022, we added the ERC to our list of expertise.

    To make sure everything’s crystal clear, we’ve launched a new feature in our client portal called the “Qualification Matrix.” Now, you might be thinking, “What’s that?” Well, it’s like a detailed map that shows you exactly why your company qualifies for the ERC.

    What’s Inside the Qualification Matrix?

    • Quarterly Breakdown: The matrix tells you how many quarters your company qualifies for and which ones specifically.
    • The Why: It explains the exact reasons your company qualifies for each quarter.
    • Government Orders: For quarters where your eligibility hinges on a full or partial suspension of business operations, the matrix will even include the government order that caused it. You’ll know precisely what the order said.
    • Operational Impact: We’ll also spell out how the government order affected your business. How did your business specifically meet the eligibility for the ERC? You’ll know.
    Qualification Matrix V1

    We Play by the Rules

    At The Relief Consultants, we don’t mess around. When we develop an eligibility opinion for your ERC claim, we use the same requirements the IRS would use in an audit. That means every document you need for an audit is right there, ready to go. No surprises!

    And here’s the kicker: In the rare event that the IRS requests information about your company’s ERC, The Relief Consultants steps in to assume all ERC-related communications. We’ll point the IRS to how your company legitimately claimed the ERC, allowing you to focus on the tasks that matter most to your business — all with peace of mind.

    Coming Soon: Your Access to the Qualification Matrix

    Exciting news, folks! The Qualification Matrix is up and running, and in the next 10 days, every single one of our clients will have access to it. Yes, you heard that right — everyone!

    Reach Out, We’re Here for You

    We’ve also got something special for you. In the portal, you’ll find a direct line to your assigned consultant. If you ever want to chat about your Qualification Matrix or need more info for your peace of mind, they’re just a call or message away.

    So, there you have it, our brand-new way to make sure your business is sailing smoothly through the ERC maze. We’ve got your back, and we’re ready to help you understand the ins and outs of the ERC. Stay tuned for more exciting updates from The Relief Consultants!

    A Helping Hand, Even if You’re Not Our Client

    At The Relief Consultants, we believe in doing what’s right, even if you’re not yet a part of our family. We understand that in the rush to navigate the complexities of the ERC, some businesses might have unknowingly contracted opportunistic “ERC Mill” actors to complete their claims.That’s why we want to extend a helping hand. If you find yourself in this situation, if you’re not a client of ours but have concerns about your ERC claim, we’re here for you. We’re happy to review your claim free of charge, potentially withdraw any inaccurate claims, and resubmit your credit within the eligibility guidelines. Your financial well-being matters to us, and we’re committed to ensuring that your ERC claim is accurate and in compliance with IRS regulations. Don’t hesitate to reach out, and let’s make sure you get the support you need, whether you’re a part of our client family or not.

    By Chris Gitre
    Founder, CEO
    The Relief Consultants

  • Latest Insights & Speculation about the ERC — a Message from our Founder

    Latest Insights & Speculation about the ERC — a Message from our Founder

    Findings & Insights from The Relief Consultants’ Founder, Chris Gitre

    On September 14th, the IRS announced a significant moratorium on the Employee Retention Credit (ERC), adding uncertainty to the timeline of many businesses’ ERC claims. The moratorium heralds two pivotal changes: an increased processing time for claims filed prior to September 14th and a complete halt on claims processing for submissions made on or after this date until January 1st, 2024.

    Since the announcement, The Relief Consultants have engaged with numerous IRS agents and meticulously tracked all ERC-related communications from government channels. Our findings present the following:

    The Current State of ERC Claims Processing

    It’s clear that the IRS has temporarily ceased processing ERC claims. Not a single client has reported receiving their anticipated refund since the moratorium’s commencement. This halt is in contrast to the IRS’s initial intimation that only processing times would lengthen. The Relief Consultants perceive this as misleading, as the current situation is not a mere delay but a complete cessation of claim processing.

    on X.com, user @danchodan leads the way about providing material updates to the ERC

    Our analysis suggests that the IRS may be developing advanced fraud detection methods, possibly leveraging technology to automate the rejection of spurious claims. This endeavor could potentially streamline the process, swiftly filtering out illegitimate claims and advancing valid ones for further examination.

    One method for detecting fraudulent activity could involve analyzing the ratio of ERC credit to wages reported on Employer Quarterly Tax Filings (Form 941s). IRS representatives have hinted at disqualifying claims that surpass an “expected credit,” based on a preset percentage of declared wages.

    Additionally, we’ve learned that the IRS might scrutinize claims where the authorized signer on the 941x form lacks a prior association with the business tax account. While this could be an effective audit tool, it may inadvertently delay legitimate claims from businesses with new financial officers.

    While the IRS’s complete plans to safeguard the integrity of taxpayer funds remain unclear, it is evident that they are fortifying their defenses against fraud. The full resumption of ERC claim processing is likely contingent on the successful implementation of these new measures.

    The Wisdom of Submitting ERC Claims During the Moratorium

    Despite the moratorium, The Relief Consultants stand by the wisdom of continuing to submit ERC claims, provided they are legitimate. Echoing sentiments from the IRS Tax Professional Webinar regarding the Moratorium, the Director of the ERC program ensured that submissions during this period will secure a place in the processing queue once the IRS resumes its operations.

    Contrary to the shocking (and concerning) advice of some IRS phone agents and one representative of an uninterested PEO, suggesting that submitting before 2024 is useless, we believe in the simple logic of queuing: to receive something valuable, one must be in line for it.

    The Future of the ERC Program

    The ERC, being encoded in law, is not subject to arbitrary changes by the IRS; only an act of Congress could curtail the program prematurely. Recent inquiries from the House Ways and Means Committee to IRS Commissioner Werfel have begun the conversation of legislative action related to the ERC. However, it seems unlikely that Congress would risk public censure by ending a relief program that many American businesses could receive yet still have still not applied for.

    It is more plausible to anticipate legislative changes surrounding the practices of tax preparers and promoters involved with ERC filings, potentially including fee limitations or required certifications.

    Weeding out the Bad Apples

    The repercussions of the ERC moratorium on some ERC firms are quite telling. As a major player in the ERC claims processing sector, Innovation Refunds (IR) was notably impacted almost immediately following the announcement of the moratorium. Within a mere 48 hours, IR laid off half of their workforce. This reduction was a direct response to the anticipated slowdown in the processing and approval of claims due to the IRS’s warning message.

    IR CEO Howard Makler made substantial changes to his company mere hours after the “IRS Moratorium”

    Prior to the moratorium, IR’s operations were expansive, with a significant advertising presence aimed at promoting their expertise in securing ERC funds for businesses. The moratorium, with its increased scrutiny and pause on claim processing, likely frightened IR leadership. The ripple effect on IR’s business was substantial, leading not only to staff reductions but also a complete halt to their advertising initiatives, effectively scaling down their public footprint.

    Our internal interviews with former IR employees, and the subsequent onboarding of a skilled team member from their ranks, revealed that while IR’s calculation methods for filings appeared to be correct, their criteria for qualifying companies — particularly under the “Partial Shutdown due to Governmental Order Rule” — were overly generous. The moratorium has opened the door for scrutiny on substantiation, which Innovation Refunds, and firms alike, were failing to provide bona-fide eligibility verification for their clients. The end to various aspects of IR’s operations will occur in courtrooms.

    One Reddit User opines that Innovation Refunds is in serious trouble

    Impact on a Prominent ERC Promoter

    Another significant effect of the moratorium was observed in the case of a prominent ERC promoter, who, in the face of the moratorium’s crackdown, ceased operations in the ERC space and pivoted to other government-related activities. This particular promoter was known for a successful referral partner program, which recruited individuals to act as a marketing funnel for potential claims. The moratorium effectively uprooted this business model by causing headaches for the promoter, ultimately persuading him to move on from the ERC.

    The shutdown of this promoter’s ERC-related activities is indicative of a broader trend where the moratorium served as a filter, weeding out entities whose operations may not have been in full compliance with the many rules of the ERC.

    In Conclusion

    The moratorium’s inception has likely accomplished two things: it has provided the IRS with a period to refine procedures for better fraud detection and served as a cautionary signal to those engaged in substandard practices.

    The complexities of the ERC are daunting, and more could be done by the IRS to elucidate the code for the public. Nevertheless, the moratorium marks a commendable stride towards eliminating unscrupulous entities from the ERC processing ecosystem.

    In conclusion, while The Relief Consultants eagerly anticipate the return of normal processing operations, we view the moratorium as a critical juncture. It represents an opportunity for the IRS to enhance the integrity and efficacy of the ERC claim process. As the landscape evolves, we remain committed to guiding businesses through legitimately filing their claims with the expertise and insight that has become our hallmark.