The Employee Retention Credit (ERC) is a tax credit that was introduced as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act in 2020. Since then, it has been extended and expanded to help businesses impacted by the COVID-19 pandemic. However, some people have raised concerns about the ERC, suggesting that it may be a scam or fraudulent. In this blog post, we’ll explain why the ERC is a legitimate and valuable program for eligible businesses.

Firstly, the ERC is a government-sponsored program designed to help businesses impacted by the COVID-19 pandemic. It is administered by the Internal Revenue Service (IRS), which is a federal agency responsible for collecting taxes and enforcing tax laws. The IRS has issued guidance on the ERC, outlining the eligibility requirements and how businesses can claim the credit. This guidance can be found on the IRS website and is updated regularly.

Secondly, the ERC has been expanded and extended several times to provide additional relief to businesses. For example, the Consolidated Appropriations Act, 2021 expanded the ERC to cover wages paid in the first half of 2021, increased the maximum credit amount, and lowered the eligibility threshold for businesses experiencing a decline in gross receipts. The American Rescue Plan Act of 2021 further extended the ERC through the end of 2021 and made additional changes to increase the credit amount and eligibility criteria.

Thirdly, the ERC has already helped thousands of businesses across the United States. According to the Treasury Department, as of August 2021, over $24 billion in ERC has been claimed by more than 1.7 million businesses. These businesses have used the credit to help retain employees, pay for operational expenses, and stay afloat during the pandemic.

Finally, businesses that claim the ERC are required to provide documentation to support their claims. This includes evidence of a decline in gross receipts or a suspension of operations, as well as records of wages paid to employees during the eligible period. The IRS has stated that it will review claims for the ERC and may conduct audits or investigations to ensure that businesses are claiming the credit properly.

In conclusion, the Employee Retention Credit is not a scam. It is a legitimate and valuable program that provides relief to businesses impacted by the COVID-19 pandemic. Eligible businesses should consider applying for the ERC to help retain employees and offset the cost of operating during these challenging times. As always, businesses should consult with a tax professional to ensure that they are meeting all requirements and properly claiming the credit. If you would like to talk to one our tax professionals, please follow the link and one of our experiences tax professionals will contact you regarding your eligibility or answer any questions you may have.