Churches Warned About Risk From Firms Offering Tax Credit Assistance

Churches Warned About Risk From Firms Offering Tax Credit Assistance

Warnings have been issued this week by Heather Kimmel, United Church of Christ General Counsel, and by the editors of the website Church Law & Tax concerning the risk posed to local churches by the pop-up industry of firms claiming to be able to assist with filing for Employee Retention Tax Credit (ERC).
The ERC is a federal pandemic relief program implemented by the CARES Act of 2020 and revised by the Consolidated Appropriations Act of 2021. As described by Church Law & Tax, the ERC provides employers, including tax-exempt entities like churches, funds in the form of financial credits for retaining employees during financial downturns or times when pandemic-related mandates disrupted operations.  
Recently, service providers have popped up offering to assist churches in claiming the credits in exchange for a share of the proceeds.  Kimmel recommends caution. 
"Church settings must tread carefully here as some of these providers are inexperienced, unqualified, and may even be fraudulent. The requirements to qualify for ERC are specific, and making false or misleading representations under the penalty of perjury on an application for ERC funds may result in investigation and prosecution," Kimmel said. "I ... recommend that churches consult with a qualified accountant to review eligibility criteria for ERC.  Some church settings may legitimately qualify."

One noted accounting firm that provides services to churches and other religious organizations has published these helpful articles on the issue: Church Law & Tax recommends that church leaders be particularly cautious about unsolicited offers of help to file an ERC claim, and consider working instead with a trusted legal, accounting or tax professional with whom the church has an existing relationship.
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