SALT LAKE CITY, UTAH – If you are a business owner applying for the ERC, you may have been guaranteed $26,000 per employee by a third-party ERC preparer.  The IRS recently cautioned taxpayers applying for the ERC to do so with their eyes-wide-open as to those to-good-to-be-true promises.  It is important to get it right as to whether your business is eligible for this tax credit.  The IRS recently published a 72-page training guideline for its tax examiners. So, time to sharpen your pencil and understand the five new myths about the ERC.

MYTH NO. 1:  If you were affected by COVID you are automatically eligible for the ERC!

By now, most business owners know there are two paths to qualify for the ERC;

  • Revenue decline; and
  • Impact on the business.

Many taxpayers believe – and wrongfully so — that they can qualify for any complication the taxpayer’s business had with the business’s operations due to COVID.

It is important to understand that merely adjusting operations in response to COVID is not enough to qualify for the ERC. There are two things a taxpayer needs to show to be eligible under the business impact test; the taxpayer needs to show that:

  • A specific COVID-related government order or mandate (federal, state, local) caused the impact to the taxpayer’s business; and
  • The taxpayer needs to show the extent and duration of that impact.

In short, the taxpayer must show that the order had a “more than nominal” impact on the taxpayer’s business while the order was in full force and effect – more on that in Myth No. 3. Best practice—the taxpayer needs to document the specific government order and detail and document the impact on the taxpayer’s business while that order was active.

Remember, if the taxpayer is not eligible for a certain quarter, the taxpayer could be facing civil as well as criminal penalties.  This is where we step in, we can review your ERC claim and help you prepare for a potential ERC audit so that the IRS will not catch you flat footed.

Tax problems are legal problems, and we solve both.  If you or someone you know has an issue with paying their federal or state taxes and needs help to end their IRS nightmare, please contact Kent Brown at Strong & Hanni by either phone at (801) 532-7080 or email at: or go to for additional information, or my personal Strong & Hanni webpage at: