What To Do if you Were Told you Don’t Qualify for ERC: Next Steps
August 7, 2023
Courtesy of SBAM approved partner, CLRA Group.
There are a lot of misunderstandings about ERC and understandably so, since this is such a new program. Business owners are often told they won’t qualify for ERC by their accountant, CPA, CFO or even ERC firms. So what should you do if you’ve been told you don’t qualify for the Employee Retention Credit?
Step #1: Understand that this is new program which has undergone multiple regulatory changes.
ERC was established in March 2020 with the CARES Act and since then has undergone two major changes in it’s regulations. In December 2020 the Consolidated Appropriations Act (CAA) was passed which made changes to ERC laws in two key ways. 1) Businesses who received PPP loans could now ALSO get ERC. 2) ERC was extended into the first two quarters of 2021. Then in March 2021 ERC was extended to the third quarter of 2021 by the American Rescue Plan Act.
Because of these changes to ERC regulations, some accountants, CPAs and CFOs are not 100% up to date on ERC. This is why it’s important to work with a team of ERC Experts when determining your qualifications for ERC.
Step #2: Realize that qualifying for ERC is a complex process
Unlike PPP loans which were very easy to qualify for, ERC is a much more complex process. Accurately determining qualification for a business takes time. Good companies will spend 100 – 200 hours compiling a qualifications report detailing “how” and “why” a business qualifies for ERC.
Unfortunately there are companies in the ERC business who are simply going for the “low hanging fruit” in ERC. These companies seek to avoid the complexity of ERC by only working with businesses who had significant revenue declines in 2020 and 2021. These types of businesses are very easy to qualify for ERC, which is why these companies can often give an ERC quote within a few days.
Step #3: Let an ERC Expert review your qualifications
If you were told your business does not qualify for ERC you may be like many other business owners who were told the same thing, but who do in fact qualify. There is no harm in getting a second or third opinion on whether or not your business would in fact qualify for ERC. According to the IRS 70% – 80% of small and medium sized businesses do qualify for ERC. Based on this, there is a good chance that your business does qualify.
At CLRA Group, we have a team of 350+ highly credentialed professionals, including specialized CPAs, Accountants, Tax-Attorneys, former IRS employees, IRS Enrolled Agents and In-House Counsel. Let these specialists determine if your business qualifies for ERC. If this team cannot qualify you, then you can rest assured that you don’t qualify, and you can take ERC off your plate.
ERC money can be used for anything including buying new equipment, paying debts, investing in staff training, purchasing new property and or giving bonuses. This is newfound money for your business that you could be missing out on. Get the peace of mind knowing whether or not you qualify by contacting an ERC Expert with CLRA Group.