What is the ERC?

The employee retention credit, better known as ERC is a refundable tax credit designed for businesses who continued to pay their employees during shutdown or decline in gross receipts due to the Covid-19 pandemic. Eligible taxpayers can claim this credit from March 13, 2020, to December 31, 2021[1], on an original or amended employment tax return for periods within those dates.On October 19 the IRS warned business owners and employers about third party companies who are offering to file for the ERC on their behalf and are charging a large upfront fee. The IRS is now auditing these amended tax returns and is finding that a very high percentage of them are fraudulent claims.  Upon audit of a fraudulent claim the employers will be required to return the tax credit along with penalties and interest.

How To Qualify

To be eligible for the ERC an employer must:

  • Have sustained a full or partial suspension of operations due to orders from an appropriate governmental authority limiting commerce, travel, or group meetings due to COVID-19 during 2020 or the first three quarters of 2021,
  • Have experienced a significant decline in gross receipts during 2020 or a decline in gross receipts during the first three quarters of 2021, or
  • Qualify as a recovery startup business for the third or fourth quarters of 2021.

These third party tax credit companies are not necessarily trained or qualified on the ERC.  They are taking advantage of marketplace conditions for their gain, filing amended returns resulting in fraudulent claims, and ultimately leaving the employers with the risk.  Our team at Whittaker is knowledgeable and trained to help you with your ERC claim. If your business legitimately qualifies for the ERC, you should take advantage of it.  If you believe you are eligible or would like us to help you determine your eligibility, please reach out to us today.  Additionally, if you suspect a tax credit company has incorrectly filed a claim on your behalf, we can help you navigate those waters as well.

Click the link below to view the IRS article.


[1] Only recovery startup businesses are eligible for the ERC in the fourth quarter of 2021.