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Employee Retention Credit for Construction and Real Estate Development Firms.
Do you qualify or not? Getting an ERC if you qualify can be a huge boon for you and your business. There can be a lot of money involved here. Getting it, if you do not qualify, can be a disaster resulting in an IRS Audit and payback of the ERC with penalties and interest. At Torchlight Tax, we sort out this qualification step with CERTAINTY. Construction and real estate development firms may very well be eligible for the Employee Retention Credit (ERC or ERTC). Many construction and real estate development firms were significantly impacted during the pandemic. Employers can retroactively claim the ERC based on hardships experienced during 2020 and 2021. Some construction and real estate development firms thought that they did not qualify for the ERC because they were essential workers, continued operations during the pandemic, and did not qualify by the gross receipts test. They may very well qualify safely by a rigorously done alternate test. One of the construction firms we worked with thought they did not qualify because their gross receipts were generally up. We looked further, however, because they went through Hades during the COVID-19 pandemic and almost gave up and closed down. How did their gross receipts go up? One factor was their supply costs went way up, and this was reimbursed by the clients as part of their gross receipts. The reason they had such a tough time is that their ability to deliver goods and services was reduced. By extraordinary efforts, they got their gross receipts up for some quarters while their profits suffered. With a potential of $26,000 per 2020-2021 employee, you should find out with certainty whether your firm qualifies for the ERC or not. Misinformation had been spread about the qualifications for this credit, resulting in some qualifying firms not applying for the credit, and some non-qualifying firms applying for and receiving the credit, thus setting themselves up for a future audit. As a full-service tax firm composed of EAs, CPAs, Tax Attorneys, and support staff, Torchlight Tax can handle your entire ERC process in-house. The first and most important step is determining whether or not you qualify with certainty. This is Dave Horwedel, EA and founder of Torchlight Tax. We recommend you watch this entire video, but if you want to skip ahead and call 1 (877) 758 7797, we will be glad to do a free consultation to see how much of ERC you qualify for safely. We will be glad to assist your firm in getting the maximum ERC that the firm qualifies for. I’ll be frank, some ERC firms are greedy, lazy, or incompetent. Some firms operate on the basis that everyone is eligible. They know full well that the IRS is likely to pay ERC funds if you had the requisite number of employees in 2020-2021. They can collect their commission from your ERC refund and disappear before the audit letters arrive. They often say: “There is no risk as you do not have to pay our fee until you get your refund.” This is false. The risk is that you get a large refund, spend it, and then you get wiped out when an IRS ERC Audit demands the refund back with fines and penalties. One characteristic of many of these firms is they end off when they receive their fee, and they do not amend the necessary 2020 and 2021 tax returns or provide Audit Defense. Other, more conservative firms can be over-cautious. They see what some of these ERC-only firms are doing and want no part of it. In their caution, they only used the easy-to-apply gross receipts test. Both of these firms might have something in common. They are not doing the study and hard work necessary to do the ERC correctly. Some firms, like Torchlight Tax, do it right. Torchlight Tax includes CPAs, EAs, and Tax Attorneys who are experienced in tax and have done a thorough study of ERC law, IRS regulations, and IRS guidance on the ERC. Our product is the tax dollars we save you or the refunds we get you, without cheating or putting you at risk. Doing it right takes a lot of study and WORK.
I will shortly discuss some specific ways construction and real estate development firms can qualify for ERC. Some of these tests can require MANY hours of work. The rewards are large and enough to be more than worth the effort. To find out how much ERC you qualify for, contact Torchlight Tax at 1 (877) 758-7797 or email us at info@torchlighttax.com. We had a taxpayer contact us after watching one of my ERC videos. His CPA had determined he qualified for a small amount by the gross receipts test. In fact, using the alternate test, he was eligible for hundreds of thousands of dollars more.