Businesses affected by the Covid-19 pandemic can still file for the Employee Retention Tax Credit. The little-known program can provide up to $26,000 per employee for wages paid in 2020 and 2021.
Many business owners are still unaware of the program or if they’re eligible to claim the credit. Tax specialist companies like Innovation Refunds help businesses determine eligibility and apply to the IRS.
However, Innovation Refunds might not be the right fit for all small businesses. It charges a hefty fee, only works with enterprises that meet a minimum number of employees, and doesn’t offer an ERC advance. This review can help you decide if Innovation Refunds is right for your ERC filing needs.
Specifically, we’ll answer these questions and more:
Innovation Refunds is a tax specialist company that helps small and medium-sized businesses (SMBs) claim the Employee Retention Credit, abbreviated ERC or ERTC.
It consists of CPAs and tax attorneys who use their expertise to ensure accuracy when helping businesses apply for the ERC. Its only service is assisting SMBs in obtaining the tax credit, but it has helped thousands of companies receive over $5 billion in tax refunds.
Innovation Refunds is based in West Des Moines, Iowa, but its services are available nationwide.
ERC tax credits were enacted under the CARES Act as a tax incentive for businesses to retain employees during the Covid-19 pandemic. It’s still lesser known as PPP loans were spotlighted during the pandemic.
Initially, businesses that received PPP loans were ineligible for ERC tax credits. However, amendments to the program allowed some to claim the refund even if they also received PPP loans.
The program ended in the fall of 2021, but SMBs can retroactively apply for the credit for wages paid during 2020 and the first three quarters of 2021. But businesses must apply before the deadline.
SMBs have until April 15, 2024, to apply for the ERC for 2020, and until April 15, 2025, to apply for the credit for 2021. Businesses could receive up to $26,000 per employee:
Applying for the ERC is a complicated process. The conditions of what wages qualify are challenging to understand. Businesses must file an amended Form 941; the accompanying documentation can total over 170 pages.
Innovation Refunds seeks to simplify the process for small business owners. You complete their online form, and Innovation Refunds lets you know if you’re eligible.
The company’s team of tax professionals will work with you to complete the tax credit application process and produce the necessary documents. There are no upfront payments, and you get a free, no-obligation ERC analysis.
If you qualify for the ERC, Innovation Refunds takes a 25% fee from your refund or tax credit for its services. While that’s a steeper payment than some of its competitors, you get a dedicated account specialist and free audit support.
Unlike similar accounting and tax prep companies that can help with ERC applications, Innovation Refunds does not offer additional accounting or tax services, such as payroll, bookkeeping, or general tax prep and filing for its clients.
The qualifications for an eligible employer depend on the period during which the qualified wages were paid.
To qualify for the tax credit on qualified wages between March 13 and December 21, 2020, your company must have carried on trade or have been a tax-exempt organization that:
Businesses applying for the ERC for wages between January 1, 2021, and September 30, 2021, must meet the following conditions:
One of the primary benefits of Innovation Refunds is the simple and streamlined process. It provides a quick and convenient online form to determine eligibility for the ERC tax credit.
You’ll enter information about your company, including how the shutdowns during the pandemic affected your business. Once you submit the information, it determines if you’re eligible.
An account specialist will then contact you about completing the process to apply for the ERC credit.
The company charges 25% of your ERC refund as its fee. The cost is higher than some of its competitors, which charge 10-15% on average. However, some companies might charge over 25%.
There are no upfront costs or hidden fees. You’ll never have to pay out-of-pocket as Innovation Refunds takes its fee directly from the refund.
The primary advantage of Innovation Refunds is that it offers a simple, streamlined, and stress-free way to apply for the ERC. The expedited claims process removes the burden of applying for the credit from business owners.
Completing the online form provides free, no-obligation ERC analysis. There are no upfront or hidden fees.
Its team of CPAs and tax attorneys, and its mission of focusing solely on ERC refunds, means you’re getting expert support. Innovation Refunds offers dedicated account specialists to assist you.
The most significant drawback is the cost. Filing through Innovation Refunds means you’ll pay the company 25% of your ERC refund. In addition, it doesn’t work with businesses with fewer than four employees.
It doesn’t offer other services like accounting, bookkeeping, or tax prep. Its sole focus on ERC refunds can be good, but it means Innovation Refunds won’t be a good fit for companies seeking additional payroll or tax services.
Innovation Refunds also doesn’t offer any ERC advance. You’ll have to wait 6-12 months for your refund or tax credit.
Yes, Innovation Refunds is a legitimate business. It’s a verified company on Trustpilot and has multiple online reviews.
Innovation Refunds has very positive customer reviews. It has a 4.9 out of 5 rating on over 230 Google Reviews and a 4.9 out of 5 rating on over 400 Trustpilot reviews.
Many reviews give the company 5 stars. Customer service is available by online form, email, and phone.
The positive reviews mention how easy the process was. Multiple customers said it saved time and could get a refund when other companies said they wouldn’t qualify.
Many customers mentioned how helpful, professional, knowledgeable, and responsive the specialists were. Several mentioned their account specialist by name.
The negative reviews discussed the hefty fee and the required number of employees. A few stated they were told they would qualify, only to be denied because they don’t have enough employees.
Other negative customer reviews complained about being denied without explanation. Several customer complaints said the company didn’t respond after they sent their tax information.
No, Innovation Refunds does not offer an ERC advance. The IRS is currently experiencing a backlog of requests. The wait time to receive the funds you’re owed is 6 -12 months.
You can apply for an ERC loan advance through UCS and receive your funds within 1-2 weeks. You can use the money for various business purposes, such as investing in growth, paying down debt, or hiring new employees.
Innovation Refunds is best suited for small businesses interested in the ERC tax refund but don’t know where to start. It also helps if you’re undaunted by the 25% fee and can afford to wait 6-12 months to receive the money.
Businesses with an in-house CPA or other tax professionals can likely navigate filing for an ERC credit independently or using a service that charges less. In addition, if you need the funds sooner, you must work with a company that offers ERC advances to get what you’re owed sooner.
Based on the available services, costs, and user reviews, we rate Innovation Refunds as a 4 out of 5. It’s a good resource if you’re willing to pay more to work with an organization that offers CPAs and other tax experts.
Disclaimer: The Innovation Refunds trademark is owned by Innovation Refunds LLC, and its use herein is for reference purposes only, and it does not indicate sponsorship or endorsement from Innovation Refunds LLC.