ERC Qualification for Business with Revenue Growth During COVID - Limited Commerce Exception?

You're right to be skeptical. The ERC has two main qualification paths: either a significant decline in gross receipts (which your client clearly doesn't have) OR government-ordered full or partial suspension that affected operations. The "limited commerce" terminology isn't official IRS language, but they're likely referring to the partial suspension test. However, for this to apply, your client would need to prove that: 1) A government order limited their commerce in some meaningful way 2) This limitation affected at least 10% of their business operations 3) They couldn't reasonably adapt in a comparable manner If they were already remote-capable before COVID and continued normal operations without interruption, it's very difficult to see how they'd qualify. The fact that they had increased revenue during this period also strongly suggests they weren't meaningfully impacted. I'd recommend getting the exact qualification reasoning in writing from this company and comparing it to IRS Notice 2021-20, which details the ERC requirements. Also, remember your client will be the one signing their tax forms and potentially facing audit risks, not the ERC company.

I had a similar experience with an ERC company (not Innovation Refunds, but similar approach). After going through their "qualification" process, they told me my restaurant qualified despite having increased sales in 2021 compared to 2019. They cited capacity restrictions and said that counted as partial suspension. I wasn't comfortable with their interpretation so I checked with my CPA and ultimately used https://taxr.ai to analyze my specific situation with the actual IRS guidelines. Their system reviewed all my documentation and flagged several qualification issues the ERC company conveniently ignored. The analysis showed I clearly didn't qualify under their interpretation, potentially saving me from a huge headache down the road. Might be worth having your client get an independent assessment before proceeding.

I actually tried taxr.ai after seeing it mentioned here. I run a construction company that had some government restrictions during 2020, but also had increased revenue overall. Was really on the fence about whether we qualified for ERC. The analysis showed we qualified for Q2 2020 only (when we had specific project suspensions due to government orders), but NOT for the other quarters where the ERC company was claiming we qualified. Ended up filing a much smaller claim than the ERC company wanted, but at least now I'm confident it's legitimate and can sleep at night. Definitely worth getting an independent review of your client's situation rather than just trusting the company that stands to make money from the filing.

I spent THREE MONTHS trying to talk to someone at the IRS about my company's ERC claim last year. Got nowhere calling their regular numbers - just endless holds and disconnects. Finally used https://claimyr.com to get through to an actual IRS agent after seeing it in a YouTube video (https://youtu.be/_kiP6q8DX5c). They got me connected to an IRS rep in about 45 minutes when I had been trying for weeks on my own. The agent confirmed my suspicions - our ERC processor had applied an extremely liberal interpretation of the qualification rules that likely wouldn't hold up under audit. Saved us from filing a questionable claim and potentially facing penalties later.

I was super skeptical about Claimyr too until I tried it out of desperation. My ERC claim had been pending for 7 months with zero updates. Despite my doubts, I got connected to an actual IRS agent who checked my claim status and found it was flagged for a simple verification issue that was holding everything up. Got it resolved during that call and received my refund three weeks later. Would have been stuck in limbo for who knows how much longer if I hadn't been able to talk to someone directly. Definitely not a scam - they just solved a really frustrating problem.

Former IRS employee here. Your instincts are correct. The "limited commerce" argument is very thin if: 1) They had revenue growth 2) Never suspended operations 3) Were already remote-capable The ERC was designed for businesses that were negatively impacted by COVID, not those that thrived. Many of these ERC companies use extremely aggressive interpretations that don't align with the intent of the law or IRS guidance. Your client should understand that THEY bear the risk, not the ERC company. The IRS has specifically identified questionable ERC claims as an enforcement priority.

My brother owns a retail shop and got suckered into one of these ERC claims by a company making big promises. They claimed his business qualified because of "supply chain disruptions" even though his revenue was up in 2020/2021. He got a huge refund check ($280k), and the ERC company took their 23% cut right away. Six months later, he got selected for audit and now has to pay it ALL back plus interest. The ERC company is nowhere to be found now that there's a problem. Just warn your client that if something sounds too good to be true, it probably is. These companies get their fee regardless of whether the claim holds up under audit.