Businesses that filed for ERC
Why does a business that filed for ERC need repair?
When the Employee Retention Tax Credit (ERTC) was initially passed in March 2020, its aim was to swiftly assist struggling small businesses and retain employees, providing relief to employers. However, the IRS encountered unforeseen challenges due to a lack of clarity on claiming ERTC details.
Consequently, many companies filed without conducting the necessary due diligence to support their claims adequately, resulting in ineligible submissions. Despite this, businesses cannot evade penalties for improper qualification, even if their filing was handled by an ERC processor that failed to inform them of the proper qualifications. Recognizing these issues, the IRS heightened compliance reviews and announced plans for intensified audit reviews and increased criminal investigations.
Failure to adequately substantiate an ERC file not only exposes businesses to IRS penalties but also forfeits potential opportunities for file financing. Non-compliance with ERC regulations can significantly harm a company's financial standing and reputation.