Salt Lake City, Utah – In my last Blog I briefly discussed the “OSHA Position”. Today I want to look at what I call the “Holy Grail” that most ERC Mills use to achieve ERC eligibility. Most ERC Mills couple the Supplier-Based Partial Suspension with the OSHA Position.
Think back to when COVID restrictions started to subside. In nearly all states, including California and New York, social distancing requirements lapsed by July 1, 2021, which just so happens to coincide with the first day of the last potential ERC quarter for businesses (except for “recovery startup businesses”). Because of the lifting of this restriction along with other factors, the third quarter of 2021 is generally the most abused quarter in terms of evaluating eligibility for the ERC.
Here is a quick overview of the ERC numbers (Note: I am only showing the maximum amount) – the maximum amount an employer can receive for any W2 employee is $26,000:
- March 13, 2020 – December 31, 2020 – $5,000
- Q1 – 2021 – $7,000
- Q2 – 2021 – $7,000
- Q3 – 2021 – $7,000
So, what we have seen these ERC Mills do when coupling the Supplier-Based Partial Suspension with the OSHA Position and qualifying an employer for the third quarter of 2021 is create enough in the way of “smoke and mirrors” around the eligibility test to lull clients into thinking that any type of supplier disruption can create ERC eligibility.
For example, we have seen ERC Mills represent that a company’s inability to procure goods or materials, or that because of price increases, this is sufficient to show both Supplier-Based Partial Suspension and the OSHA Position. For the most part we are seeing that this position is difficult or almost impossible to substantiate.
At the end of the day, the federal government is taking improper claims of stimulus funds seriously. What we have seen is that the federal government is not afraid to prosecute taxpayers who have abused the system. This is especially true with those taxpayers who relied on the ERC Mill. If you or someone you know is claiming the ERC, or intend to claim the ERC, please make sure you understand who is performing your work, what is being claimed, what measures are being taken for substantiation, and what you are expected to receive in return.
In my next Blog I will discuss ERC Insurance. 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: kbrown@strongandhanni.com or go to my personal Strong & Hanni webpage at: https://strongandhanni.com/attorneys/attorney-kent-brown/
