As we’ve shared, not all ERC processors are created equal. The IRS continues to warn business owners about ERC processors that over-promise credits, particularly as a result of overly aggressive determination of eligibility.
One recent NEWITY applicant shared their ERC calculation from a “specialist” ERC processor and asked us to explain the difference between our determination that the business was entitled to ERC of approximately $20,000 vs the determination of the “specialist” that the business was entitled to more than $470,000. We’ve outlined the major differences between NEWITY and the “specialist” processor to arm you with the ERC knowledge to protect your small business.
Representation of Eligibility
Be wary of ERC processors that don’t cite specific governmental orders, but instead accept checkboxes alongside brief self-attestations to substantiate eligibility based on government mandated shutdown. As the IRS noted in their recent webinar on ERC Abuse, all businesses were impacted by COVID but that doesn’t mean they’re eligible for the ERC. Only businesses specifically impacted by government orders would be eligible based on such.
At NEWITY, our in-house team of attorneys thoroughly researches your business’ operations, city, and state to identify the specific governmental orders that directly impacted your business. The legal team documents their findings in a legal memo, citing all relevant governmental orders, to memorialize your basis for eligibility for your records, placing the onus of proof of eligibility on the NEWITY team – not you.
ERC calculations involve many layers of detail that add and/or remove certain aspects of payroll, benefits, and government stimulus programs. Look out for calculations that do not deduct wages that were paid with funds received from other government stimulus programs, like PPP or the Restaurant Revitalization Fund, and do not exclude wages paid to majority owners and their family members.
NEWITY’s thorough calculation and review process is built for IRS compliance, ensuring your ERC credit is calculated accurately based on your payroll, employee type, and any other government programs you may have participated in during the pandemic. An expert in the program should be performing this calculation for you based on a comprehensive review of your tax filings and payroll documents to ensure your total ERC filing is correctly determined.
New Specialist Companies
Hundreds of new ERC processor companies emerged in the past year, many of which are solely focused on filing ERC. You should be wary of groups that have no other history of government program or tax involvement prior to ERC. Many of these groups promise IRS audit support, but as a new company solely focused on ERC, the processor may not exist in the future if, and when, you need audit support.
Our team at NEWITY has supported more than 120,000 businesses in accessing SBA loans, tax credits, and the Paycheck Protection Program (PPP). You can rest assured that NEWITY’s calculations were performed with the utmost care following exact IRS guidance, our work is thorough and well documented, and our work product and team will be available to you, should you need any ERC support.
If the IRS determines that ERC was improperly filed, business owners will be held responsible for repayment of the ERC and may face potential fines. We urge all small business owners to protect yourself against new specialist ERC organizations.
These ERC processors have and will continue to take advantage of small businesses. File your ERC with a trusted company that has a longstanding reputation of supporting businesses in properly accessing capital through government programs.
At NEWITY, we welcome all small businesses looking to access government programs to get started with our team of experts today.