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Are Home Care Agencies Getting the Most Out of the Employee Retention Credit?

by Eric Hylton, Former IRS Commissioner of the Small Business/Self Employed Division; alliantgroup National Director of Compliance

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It’s well known that home care providers are prime candidates for claiming the Employee Retention Credit (“ERC”), which was enacted by Congress to reward businesses for their efforts to keep employees on payroll during the pandemic. But is your credit provider doing things the right way or just telling you a number to write on your tax form?

Home care providers qualify for the ERC in a variety of ways, including if they:

  • Were unable to market at facilities due to visitation restrictions
  • Had reduced hourly caregiver to client ratios
  • Experienced sitter services that were unable to go into hospitals and facilities due to restrictions on visitors
  • Had placement services that were unable to tour facilities and take on new clients

By way of example, our firm was able to help one Senior Helpers franchise with $7.5 million in annual revenue and 80 employees, claim nearly $3 million in federal credits due to their inability to market their services. In another case, a Comfort Keepers franchise with $12.7 million in annual revenue and 192 employees received more than $650,000 in credits simply because restrictions limited how many clients they could visit.

Are you Claiming ERC the Right Way?

To be frank, the question isn’t whether or not home care providers qualify for the credit – given that our firm alone, as the exclusive provider for the HCAOA, has helped claim millions of dollars for home care agencies – the real question has been whether or not home care providers are using the right team to help calculate, substantiate, and claim the credit for them.

One of the primary reasons I was drawn to alliantgroup after leaving the IRS after years of service was the firm’s dedication to quality control. As the former Chief of the IRS’ Criminal Investigation unit, I have seen firsthand the way in which “fly-by-night” shops will do the absolute bare minimum while pestering clients with fees.

This has been the case with the ERC, where providers have seemingly sprung up overnight in order to capitalize on struggling businesses trying to claim the incentive.

Say No to Upfront Fees

Typically, these companies charge an upfront fee to claim the credit for the taxpayer’s business and may even charge a fee just to tell you how much you can qualify for. I’ve even heard that some providers are telling home care agencies that upfront fees are required by the IRS.

Let me be clear, the IRS does not require providers to charge upfront fees. alliantgroup requires no upfront costs whatsoever and will not charge you to calculate how much you are eligible to claim. In fact, even if you engage with alliantgroup and they are unable to qualify you, they will eat the cost themselves.

Claiming the Right Way Can Mean Larger Refunds

The true advantage of working with a firm like alliantgroup is the vast amount of experience that backs up each and every ERC study our team produces. Our process is the most stringent and thorough in the industry and we regularly find significantly more in credits for those that have switched to alliantgroup.

My colleagues at alliantgroup include four former IRS commissioners, tax attorneys, and industry experts, along with statisticians and analysts that work daily to ensure our firm provides our clients with top-rate studies that repeatedly yield optimal and accurate tax credit calculations for our clients.

The diligence and care that we put forward for each ERC recipient is how we’ve been able to double and sometimes triple a home care agency’s refund. Many agencies are only claiming based on a decline in revenue, but we’ve helped most of our clients claim additional funds under the business impact test because we’re the only firm that has a full database of all federal, state and local mandates that have impacted the home care industry. That is, we can accurately document your claim to IRS standards, unlike other providers who are only telling you what number to put on your 941-X without proper substantiation.

This is a credit that is separate from the Work Opportunity Tax Credit (“WOTC”) and that Congress put forward to lift American businesses out of the pandemic. As a firm, we have used our skills as tax incentive experts to help our clients take full advantage of this valuable program. We have recognized the true impact of this powerful incentive and it’s these results that our team strives for on a daily basis.

Experience. Diligence. Care. These are the true difference-makers when it comes to handling ERC claims. Home care providers need to keep this in mind when choosing whichever provider, they decide to entrust with their credit calculations.

About the Author

Hylton held several prominent positions at the IRS, including serving as Deputy of the Criminal Investigation Division and as CI’s head of International Operations. As National Director of Compliance, Eric employs his years of experience at the IRS to assist alliantgroup’s clients as an ambassador for U.S. small and medium sized businesses (SMBs) and in helping others become tax compliant.