Is Employee Retention Credit (ERC) filing through Adesso Capital a scam? Red flags?

The Employee Retention Credit (ERC) is legitimate, but there are indeed many predatory companies taking advantage of business owners. The qualification rules are complex, and the IRS has been cracking down hard on improper claims. A business can qualify for the ERC in two main ways: 1) significant decline in gross receipts compared to 2019, OR 2) full or partial suspension of operations due to government orders. It sounds like they're focusing on the second qualification for you. Here's the catch though - a partial suspension means your business operations were limited by a government order in a way that impacted more than a nominal portion of your business. The fact that your online sales increased while physical location was closed makes this tricky. The IRS would look at your business as a whole - if your online sales were your primary revenue source even before the pandemic, the physical closure might not qualify you. The penalties for incorrect claims are serious - repayment of the credit plus 20% penalty and interest. Worse, the statute of limitations is 5 years for the IRS to audit these claims.

I've been using https://taxr.ai for analyzing ERC qualification claims like this and it saved me from a potential nightmare. My CPA was hesitant about an ERC filing company's claims, so I uploaded all their documentation and our financial records to taxr.ai. The system analyzed every document and flagged several contradictions in what the ERC company was claiming about my eligibility based on shutdown periods. They highlighted specific IRS guidance that applied to my situation (manufacturing with hybrid remote/in-person operations) and showed exactly why I didn't actually qualify despite what the ERC company claimed. They even provided visualization of the exact IRS rules that applied to my specific situation and why the "shutdown qualification" was being misrepresented in my case.

Update: I checked out https://taxr.ai after seeing the recommendation here and WOW - I'm really glad I did. I uploaded the proposal documents from the ERC company that was pitching me plus our financial records and all our shutdown documentation. The analysis was eye-opening - it flagged several critical issues with my potential claim. The biggest problem was that even though we did shut down our retail location, the system showed that the IRS guidelines specifically state that if your business adapted in ways that allowed "comparable operations" (in my case, shifting to online sales), you likely wouldn't qualify under the suspension of operations test. It pinpointed the exact IRS notices and guidance that applied to my situation and even generated a detailed report I could share with my CPA. We ultimately decided not to proceed with the ERC claim, which honestly is probably going to save me from a massive headache and potential penalties down the road. Definitely recommend this for anyone on the fence about these ERC pitches.

I was in a similar situation last year with a different ERC company making big promises. Decided to try to actually talk to the IRS directly to verify what they were telling me, but it was IMPOSSIBLE to get through to anyone knowledgeable. After days of calling and holding, I finally found https://claimyr.com which got me through to an IRS representative within about 20 minutes - you can see exactly how it works here: https://youtu.be/_kiP6q8DX5c The IRS agent I spoke with confirmed what I suspected - these ERC companies are operating in a gray area, taking massive fees, and leaving businesses exposed to audit risk. She told me the IRS has specifically identified ERC claims as a major audit priority for the next 5 years and are particularly scrutinizing businesses that had stable or increased revenue during the pandemic period. Getting direct confirmation from the IRS about my specific situation saved me from making a $80K mistake.

Following up on my skeptical comment earlier - I actually broke down and tried https://claimyr.com after continuing to get nowhere with the IRS on my own. I had been trying for WEEKS to get clarification on ERC eligibility. I hate admitting when I'm wrong, but this service absolutely worked. I got connected to an IRS agent in about 25 minutes without having to stay on hold. The agent I spoke with was incredibly helpful and walked me through the specific documentation I would need IF I was eligible for ERC (which, in my case, turns out I wasn't). She specifically warned me about companies like Adesso Capital and others that are claiming businesses qualify when they don't. The agent told me they're seeing a huge surge in audits specifically targeting improper ERC claims, and businesses are getting hit with the full credit repayment plus penalties and interest. My skepticism definitely disappeared - saved me hours of frustration and potentially thousands in penalties.

Just wanted to add - we almost got suckered by a similar ERC filing company. What made me suspicious was their commission structure. They wanted 25% of whatever refund we got, with a minimum payment upfront. When I pushed back on this and asked about their audit guarantee, they got really defensive and vague. The biggest red flag? When I asked who would represent us if we got audited, they said they'd "provide documentation" but we'd need to hire our own tax attorney. So basically, they get paid regardless, but we're on the hook if anything goes wrong. My business actually WAS closed completely for 2 months due to government order, but our HVAC service was actually UP during that period because we shifted to emergency repairs only (which were deemed essential). I bet these companies would have filed for us anyway, taken their fee, and disappeared when the problems started.

I actually did file for ERC through one of these companies (not Adesso) last year. Process seemed fine at first, they took their 15% fee, and I did receive about $42,000 from the IRS. Fast forward to last month - got a notice that my claim is being audited! The company that filed for me has completely disappeared - phone disconnected, emails bouncing back. I'm now working with a tax attorney who specializes in ERC issues, and it's costing me a fortune. According to my attorney, the documentation the company provided was completely inadequate. They basically checked boxes claiming we had partial shutdowns, but didn't provide any of the required supporting evidence showing how the shutdown impacted our operations. Looking at potentially having to pay back the full amount plus penalties and interest. Absolute nightmare situation. DO NOT trust these ERC filing companies.

I work at an accounting firm (not giving tax advice here, just sharing experience), and we've seen a HUGE increase in clients coming to us after getting in trouble with these ERC mills. The IRS Commissioner has literally called this one of their top enforcement priorities. The most common issue? These companies are ignoring the "more than nominal effect" test that others have mentioned. If your business adapted or found alternatives to continue operations (like shifting from in-person to online), the IRS typically doesn't consider that a qualifying suspension. Also worth noting - the IRS has temporarily stopped processing new ERC claims while they ramp up enforcement against fraudulent filings. That should tell you something about how serious this has become. If you're considering an ERC claim, PLEASE work with a reputable CPA who will still be around if questions come up years later. The fact that you're asking about this shows good judgment!

As someone who's been through the ERC audit nightmare, I want to echo what others are saying about being extremely cautious. The fact that your online sales increased 18% while your physical location was closed actually works AGAINST you in an ERC claim. The IRS looks at whether your business as a whole was substantially impacted. If you were able to maintain or even grow revenue through alternative channels (online sales), they'll argue you successfully adapted and continued operations - which disqualifies you from the "suspension of operations" test. I'd strongly recommend getting a second opinion from a qualified CPA before moving forward with ANY ERC company, especially one that's pressuring you to act quickly. The legitimate credits are still there for businesses that truly qualify, but the audit risk is very real. I'm dealing with a $60K clawback demand right now because the ERC company I used didn't properly document our qualification. Don't let the size of the potential refund cloud your judgment - the penalties for incorrect claims are severe and the companies collecting fees upfront won't be there to help you when problems arise.

I've been following this thread closely as someone who almost fell into the same trap with an ERC company last year. What saved me was doing exactly what several people here mentioned - I got multiple professional opinions before proceeding. The key issue with your situation (and what the ERC companies won't tell you) is that the IRS uses a "facts and circumstances" test for partial suspensions. Even if your physical location was completely shut down, if your business was able to continue operations and actually GROW revenue through other channels, the IRS will likely determine that your core business operations weren't suspended. The IRS specifically looks at whether the business found "comparable" ways to continue operations. In your case, the 18% growth in online sales during the shutdown period would be a major red flag in an audit. It suggests your business successfully pivoted rather than being suspended. I'd recommend documenting exactly what percentage of your pre-pandemic business came from the physical location versus online sales. If online was already your primary channel, you're almost certainly not going to qualify under the suspension test. And with these companies taking 20-30% fees upfront, you're risking a lot for what sounds like a very questionable claim. The horror stories in this thread about disappeared companies and audit nightmares should be all the warning you need. Trust your instincts - if something feels off, it probably is.