The Employee Retention Credit, or ERC, was intended to be a financial lifeline to small businesses struggling to make ends meet during the pandemic. The government program led to the emergence of an industry focused on helping businesses claim these credits, with some taking large percentages of the awarded refunds for their services.
The Employee Retention Credit was intended to be a financial lifeline to small businesses struggling to make ends meet during the pandemic. The company is positioned as a middleman between small business owners and independent tax attorneys. Innovation Refunds markets to clients, determines if they are viable candidates for the credit and then collects businesses' documentation. For its services, it charges a contingency fee, which amounts to 25% of the refund once it's paid out to the business, according to its website.
"management was encouraged to take aggressive tax positions on qualifications in order to maximize their contingency fee." Two other former workers echoed this view, saying the company put through businesses whose eligibility fell into a gray area. This was not the case, however, for those who were outright ineligible, as those businesses were rejected, the two former workers said.
nearly $7 billion worth of claims and he was aware of fewer than 10 clients under audit when he left in mid-September as part of a round of layoffs, adding all had results "moving along positively." But former employees and contractors, many of whom were tasked with selling the tax credit to businesses, said the metrics they were supposed to hit were "unrealistically high," which fostered an "aggressive" outreach approach.
Another former employee said that as time passed, and prospective customers ran dry, the follow-ups with viable leads only got more aggressive. CNBC viewed an exchange between Innovation Refunds and a potential client prior to the Sept. 14 moratorium, where a sales representative told the company one of its third-party tax firms qualified it under "limited commerce" due to pandemic shutdown orders, even though the business was able to operate remotely.
But five of the 20 former employees and contractors CNBC spoke with spoke positively about their time at the company.
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Source: NBCLA - 🏆 319. / 59 Read more »