What to Know About ERC and Avoiding ERC Scams
3/26/2024
As a business owner, you may have seen information about the Employee Retention Credit (ERC), a tax credit designed to reward businesses that didn’t lay off employees during the pandemic. SouthState wants to provide assistance to those seeking this credit, as well as help them avoid related scams that have been reported by the IRS.
Businesses must be able to verify they were negatively impacted by government regulations or supply chain disruptions, or experienced a significant decline in revenue.
Businesses are eligible for the credit even if they received funds through the Paycheck Protection Program (PPP). Note that wages funded by PPP cannot be used for ERC calculation, which will likely result in a lower ERC amount.
Additionally, we continue to monitor the current proposed legislation regarding the ERC (H.R. 7024: Tax Relief for American Families and Workers Act of 2024). If passed by the Senate, the new legislation will change the deadline to apply for the ERC.
When someone searches online for ERC information, scammers are pushing false advertisements that claim they can help the person get the credit. The IRS also warns that third parties are aggressively promoting these ERC schemes through radio advertising and direct solicitations, promising tax savings that are too good to be true.
SouthState fraud experts report that companies are sending letters using SouthState’s name and false information. SouthState bankers are reaching out to customers, however, through a process using SmartBiz® and Ready Capital®. If you have questions, contact us at [email protected].
Learn more about ERC Assist and how our business bankers can help your business claim funds.
What is the ERC tax credit?
The ERC is a fully refundable payroll tax credit for businesses that kept employees on the payroll during the COVID-19 pandemic in 2020 and 2021. Credits can be as high as $5,000 per employee in 2020 and as high as $21,000 per employee in 2021, for a total of $26,000 per retained employee.Businesses must be able to verify they were negatively impacted by government regulations or supply chain disruptions, or experienced a significant decline in revenue.
Who can get the ERC?
Businesses that experienced a significant decrease in revenue in 2020 and 2021, compared to 2019, or experienced partial shutdowns due to government mandates may have this tax credit waiting for them.Businesses are eligible for the credit even if they received funds through the Paycheck Protection Program (PPP). Note that wages funded by PPP cannot be used for ERC calculation, which will likely result in a lower ERC amount.
When is the deadline to apply?
Businesses can file amended 941x documents for 2021, and the IRS will send a credit based on that year. The deadline to apply for the 2021 ERC is April 15, 2025. The IRS recently announced a pause in processing Employee Retention Credit applications. This allows for safeguards to be implemented to the ERC program to ensure the integrity of the applications and funds being provided. During this period, SouthState will continue to assist businesses with preparing applications for the ERC tax credit.Additionally, we continue to monitor the current proposed legislation regarding the ERC (H.R. 7024: Tax Relief for American Families and Workers Act of 2024). If passed by the Senate, the new legislation will change the deadline to apply for the ERC.
Beware of ERC scams
Similar to scams related to PPP, the IRS reports that scammers are again targeting business owners. Scammers are either stealing valuable personal information to commit fraud or charging exorbitant fees to “help” the business owners when they don’t actually qualify for the credit.When someone searches online for ERC information, scammers are pushing false advertisements that claim they can help the person get the credit. The IRS also warns that third parties are aggressively promoting these ERC schemes through radio advertising and direct solicitations, promising tax savings that are too good to be true.
SouthState fraud experts report that companies are sending letters using SouthState’s name and false information. SouthState bankers are reaching out to customers, however, through a process using SmartBiz® and Ready Capital®. If you have questions, contact us at [email protected].
How do I get my ERC?
SouthState is available to help small businesses safely claim their ERC through “ERC Assist.” Our bankers have the expertise and knowledge to help small businesses navigate the process and ensure that they receive the credit they are entitled to. If you choose to use ERC Assist and SouthState to help you obtain your tax credit, fees are disclosed at the beginning.Learn more about ERC Assist and how our business bankers can help your business claim funds.
