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Journal: Blog2
  • Dr. Andy Schell, Ph.D., DBA, CPA, CMB

Beware of ERC Free Money

Some say "desperate times call for desperate measures." But the Employee Retention Credit (ERC) promoted widely on social media may not be worth the personal risk. ERC is sometimes called ERTC for Employee Retention Tax Credit


While there are legitimate ERC claims, it is unlikely for an independent mortgage company to qualify unless the broker forces the approval. This forcing of the approval could put the entire payment at risk, including the amount paid to the broker likely repaid by the IMB.


Here are the basics about ERC.

The IRS states the eligibility is a business that meets the following criteria:

  • Were shut down by a government order due to the COVID-19 pandemic during 2020 or the first three calendar quarters of 2021, or

  • Experienced the required decline in gross receipts during the eligibility periods during 2020 or the first three calendar quarters of 2021, or

  • Qualified as a recovery startup business for the third or fourth quarters of 2021Eligible employers could receive credits of up to $26,000 per retained employee.

How many mortgage companies were shut down from COVID (remote work is not shut down) or had a decline in revenue during 2020 or 2021? The likely answer is not many. Can you think of any independent mortgage bank that has 2020 revenue less than 2019?


The key challenge is that the application is not like a bank loan, where the lender makes the eligibility decision. The applicant represented by the broker can represent qualification without verifying the qualification.


If you receive ERC without qualification and are identified for audit, the IRS is likely to pursue recovery in full following the same tactics as if payroll tax was not remitted, which means aggressively to all involved.


Here is a link to the IRS website.


Here is a link to documentation provided by Brad Marckx, CPA at Cohn Reznick.


To avoid IRS recovery risk...

  1. Use your CPA Auditor to calculate eligibility.

  2. Work with another trusted professional who does not aggressively offer ERC claims.

  3. Request a detailed worksheet explaining your eligibility.

  4. Be cautious of social media posts offering free money at no risk.

Be careful accepting offers from ERC brokers. Always confirm the qualification criteria.

Just because the broker can get you the money does not mean you qualify to receive it.


As a simple rule, never deal with or apply for IRS-related issues without CPA representation.


About Dr. Schell:

Dr. Andy Schell, Ph.D., DBA, MSML, MBA, CPA/CFF, CMB


Dr. Schell is CEO, Managing Partner, and Co-Founder of Mortgage Banking Solutions and the Founder of MBS Financial Services ("MBS"), based in Austin, Texas. Dr. Schell is known for his ability to turn "vision into reality" and "chaos into order" as he finds creative solutions to the challenges his clients face addressing Revenue Stability, Technology Enhancement, Financial Management, and Workflow Efficiency.


He has 4 decades of experience as a strategist directing the activity of both small and large groups of employees including mortgage lending activity at Bank of America. His leadership knowledge extends from his hands-on experience and his academic training in his MBA, his master's degree in leadership, and his doctoral work to examine employee dynamics given leader stimulus


To find out more information about MBS' services, please click HERE


To contact Dr. Andy Schell, click HERE

Find more information at

DoctorSchell@MBS-Team.com ; (512) 501-2812;

Doctor Schell the Profit Doctor





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