IRS: Louisiana businesses should check eligibility for COVID-era tax credit before deadline

BATON ROUGE, La. (BRPROUD) — The Internal Revenue Service says small businesses in Louisiana should check their eligibility for Employee Retention Credit claims before a March deadline.

The IRS defines an ERC as a pandemic-era refundable tax credit for eligible businesses and tax-exempt organizations with employees.

“Many businesses were wildly misled about the qualifications, and the IRS is taking a special step to highlight common problems being seen about these claims,” said IRS Commissioner Danny Werfel. “The IRS urges ERC claimants to get with a trusted tax professional and review their qualifications before time runs out on IRS disclosure and withdrawal programs.”

Anyone who filed a claim in error and got a payment can apply for the ERC Voluntary Disclosure Program by the March 22 deadline. According to the IRS, the program lets businesses repay just 80% of the claim.

Taxpayers who filed a claim that hasn’t been processed are urged to participate in the claim withdrawal process if they know their claim is ineligible, the IRS said.

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“We’ve heard from the tax pro community and others that sharing more warning signs can help point well-intentioned people in the right direction,” Werfel said. “Many of these taxpayers were misled by overzealous and unscrupulous promoters taking advantage of honest taxpayers. The most beneficial time to resolve any incorrect claims is now before this special window closes.”

The IRS said these seven common red flags could mean an ERC claim could be incorrect.

• Too many quarters being claimed.

• Government orders that don’t qualify.

• Too many employees and wrong calculations.

• Business citing supply chain issues.

• Business claiming ERC for too much of a tax period.

• Business didn’t pay wages or didn’t exist during eligibility period.

• Promoter says there’s nothing to lose.

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