Flood of Offers for Pandemic Tax Credits, but Caution Urged
Small businesses are finding themselves in the crosshairs of a barrage of ads, phone calls, and emails promising assistance in claiming a pandemic-era tax credit. Known as the Employee Retention Credit (ERC), this tax break was introduced in 2020 to provide support to small businesses grappling with the challenges of the Covid-19 pandemic. It offers a substantial benefit, potentially reaching up to $5,000 per employee for 2020 or a hefty $28,000 per employee in 2021.
The catch? Experts are cautioning business owners to tread carefully and review their eligibility with a qualified tax professional before taking the plunge. While the ERC applies to tax years 2020 or 2021, business owners still have the opportunity to amend returns and claim the credit.
However, the surge in companies offering assistance has led to a flood of calls and solicitations, causing a headache for business owners. Certified financial planner Craig Hausz, CEO and managing partner at CMH Advisors in Dallas, remarked on the onslaught, stating, “The calls and solicitations are brutal. Our clients are getting a ton of these, and it’s just bombarding them.”
While Hausz’s firm has successfully completed over 100 amended filings for clients to claim the ERC, they also exercise caution by informing clients when they don’t meet the eligibility criteria.
Enterprises colloquially termed “ERC mills” have emerged, charging small businesses a hefty 25% to 30% of the credit received. Kristin Esposito, director for tax policy and advocacy for the American Institute of CPAs, warns of the potential pitfalls associated with such services.
In the midst of this ad onslaught, the key takeaway for small business owners is to proceed with caution, seek guidance from qualified tax professionals, and avoid falling prey to opportunistic entities seeking a hefty cut of their hard-earned tax credits.
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