Daniel HonanFounder, Profitable Painter CPA PLLC · I help painting contractors increase profits & cash flow while reducing taxes♦ Bookkeeping ♦ Tax

Painting Biz Owners: Learn the latest on ERC fraud & how to avoid being a potential fraud claim

Name: Painting Biz Owners: Learn the latest on ERC fraud & how to avoid being a potential fraud claim
Uploaded: 2023-12-26T14:30:12+00:00
Duration: 7 s
Channel: Daniel Honan
Description: In this brief discussion, the speakers warn painting business owners about the serious risks of Employee Retention Credit (ERC) fraud. They explain that…

26 Dec 2023 · 0 min

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In this brief discussion, the speakers warn painting business owners about the serious risks of Employee Retention Credit (ERC) fraud. They explain that if the IRS determines fraud, the usual five‑year statute of limitations is removed, allowing indefinite pursuit, and note that the IRS has already initiated hundreds of criminal prosecutions. The conversation stresses the importance of having solid documentation to support any ERC claim and recommends proactively correcting any over‑claims before the IRS discovers them. While acknowledging that qualifying for the ERC is possible and beneficial, they advise owners to understand the pitfalls, ensure they have proper proof, and proceed cautiously to avoid severe penalties.

Worst case scenario would actually be fraud, potential fraud, if you just blanket apply for everything and you have nothing to back that up.
If the IRS believes that fraud has been involved, then that 5-year time frame, it's extended to basically forever. They claim fraud, they have as much time as they want to come after you. IRS has already done 250 criminal prosecutions for ERC fraud. They're just getting started. The IRS and Congress knows that this program has been abused. If you think your small company has accidentally taken a little bit more than it should, I would advise trying to get that rectified. Dip it in the bud. If you catch it before the IRS does, things go a lot better for you.
Not to scare people away from the RC. You can definitely, if you qualify, there's nothing to be afraid of. If you get the docs to support it, the proof, you can totally qualify for this and be completely fine. Make sure you go in knowing the pitfalls and making sure you're covered.