Clarus Solutions Shares Insights to Help Businesses Stay Vigilant with Employee Retention Tax Credit Filings as IRS Issues Warning

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Increased IRS Funding and Inexperienced Third-Party Providers Create Perfect Storm for Missteps

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Today, Clarus Solutions, the platform that helps employers transform cash flow by simplifying access to employment tax credit opportunities, is sharing insights on how small businesses can make the most of the Employee Retention Credit (ERC) ahead of the upcoming tax season, while also avoiding the risk of problematic future audits and the penalties, interest, and potential negative publicity that can arise as a result.

When the Inflation Reduction Act was passed in August, the IRS received billions of dollars for Enforcement and Operations Support. The agency now has the resources to take a very close look at tax filings for discrepancies and fraud, specifically related to COVID programs like the ERC. Further, there has been a significant increase in new entrants to the tax credit service industry, seemingly driven by the economics available through the ERC program. On October 19, the IRS warned taxpayers to be wary of direct solicitations by third-party tax credit service providers because the agency believes that some service providers are advising taxpayers to claim benefits when they may not qualify. In that warning, the IRS noted that taxpayers are always responsible for the information reported on their tax returns and that penalties and interest will be applicable for inappropriate claims under this program. Accordingly, it is critical that taxpayers claiming benefits assess the capabilities of the service provider they choose and properly document their eligibility under the program.

“Our goal is always, first and foremost, to help the most number of businesses unlock the full value of federal and state tax incentives, but doing so isn’t always easy without the right help, especially now,” said Terracina Maxwell, president & co-founder of Clarus Solutions. “Between the inevitable increased focus by the IRS and new entrants into the marketplace vying for business, the environment is ripe for missteps. Our aim is certainly not to scare folks, but instead to make sure they are taking advantage of the ERC in a safe, beneficial way.”

Improperly claiming the ERC could result in taxpayers being required to repay the credit along with penalties and interest. To help small businesses properly take advantage of the ERC this year, while also protecting their business, Clarus is sharing its top three insights:

  • 1) Get an expert: Qualified providers should be familiar with the levels of surety applicable in issuing written advice (levels of assurance can include will, should, more likely than not, substantial authority, realistic possibility of success, and a reasonable basis to conclude). Qualified providers should also have professionals that have issued written tax advice in situations unrelated to COVID relief. Because most qualified employers are under 500 full-time employees, this is the first time they’ve ever taken a tax credit. And because tax credits have historically been claimed mostly by large employers with expensive and sophisticated advice, these new participants are frequently at a loss for how to understand qualifications.
  • 2) Get it in writing: Unlike the PPP, which was overseen by the Small Business Administration and required an application, review, and approval process, no governmental agency will review individual business qualifications and indicate that a business qualifies before issuing funds for ERC. Qualification for the ERC is not always straightforward and can be somewhat subjective, so be sure the provider you choose to determine your company’s eligibility provides it in writing.
  • 3) Get it insured: The qualified provider you choose should be able to demonstrate that their work is covered by professional liability insurance that provides coverage should there be an issue with their advice. Further, if a potential partner wasn’t around before COVID, make sure they will still be in existence five years from now when a potential audit requires a defense of your claim.

As most people know, being audited by the IRS can be a stressful and expensive experience, but filing a correctly handled ERC claim doesn’t have to be. Clarus Solutions employs seven tax attorneys and former CPAs who have represented multiple billion-dollar employers, one of whom signs off on every ERC claim made by Clarus customers.

Clarus monitors state and federal employment tax credit programs and has helped companies secure more than $550MM in incentive dollars. To learn more and determine if your business is eligible for ERC, visit

About Clarus
Clarus Solutions helps employers transform their cash flow by simplifying access to employment tax credit opportunities. Founded by tax experts, Clarus believes in the power of tax credits for improving business financials and built its cloud-based platform to help more businesses unlock the full value of federal and state incentive programs. Backed by a proprietary technology platform and unparalleled client service, Clarus collaborates with companies to deliver actionable insights for leveraging programs that impact hiring decisions and fundamentally improve the economics of their business.

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Aimee Eichelberger
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