Employee Retention Credit (ERC) solutions
With frequent changes to the ERC program and an increasing number of ineligible claims, the IRS halted processing new ERC claims and significantly increased scrutiny of existing claims. Businesses have fallen victim to widespread fraud due to aggressive marketing promoters, misinterpretation of guidelines and outright fabrication of facts. However, the Voluntary Disclosure Program (VDP) was implemented as an amnesty program to allow certain parties to withdraw potentially incorrect claims without penalty. Eligible taxpayers had until March 22, 2024, to apply to the VDP.
If you have questions about a claim you filed, contact our ERC specialists to help you navigate the process.
See how our team can help you
The IRS offers a voluntary disclosure program for ERC claims, allowing taxpayers to retain 20% of the ERC received. By returning the remaining 80%, taxpayers can avoid future audits, retain accrued interest and avoid amending income tax returns. The program deadline is March 22, 2024. Baker Tilly specialists can help in evaluating ERC claim risks and assist with program submissions if deemed beneficial.
ERC audits are complex, requiring taxpayers to substantiate eligibility and accurate credit calculations to the IRS. Those relying on the suspension test must demonstrate the impact of state and local orders on their operations. Baker Tilly has extensive experience representing taxpayers in ERC audits, advocating for eligibility under both gross receipts and suspension tests.
ERC presents a challenge for M&A deals due to its size and statute of limitations. Acquirers often seek assurance from qualified firms regarding the credit’s legitimacy to mitigate long-term risks. Baker Tilly offers specialization in ERC regulations and can conduct independent reviews for M&A firms seeking a second opinion or businesses preparing for sale, aiming to address ERC concerns preemptively before formal due diligence.
The employee retention credit provided temporary relief for employers who continued to pay their workers despite COVID-19-related disruptions, but with most restrictions for businesses easing, the ERC no longer seemed necessary and its termination was included in the recently passed $1.2 trillion bipartisan infrastructure act.
The extended and expanded employee retention credit (ERC) from the Consolidated Appropriations Act (CAA) could have significant benefits for you and your business. However, the regulations surrounding the ERC tend to be fact specific and tedious. Baker Tilly has put together a set of comprehensive resources available to assist businesses that are considering taking advantage of the ERC.
New guidance is being released regularly. Contact our ERC specialists to learn if you qualify for the ERC.
The CAA made several significant employer-friendly changes to the ERC and have effectively created two separate versions of the credit, one for 2020 and another for 2021. We have developed a flowchart that outlines the differences between the two and guidance on how to determine eligibility.
For more information or to learn how Baker Tilly specialists can help, reach out to your Baker Tilly advisor or contact our team.