Under the CCG, an Adjustment Amount is any amount of any ERCs applied for with EZ-ERC’s assistance that have been denied or required to be returned to the IRS due to the IRS concluding that the Client was not an “eligible employer” for all or a portion of the ERC claim period.

The Adjustment Amount is equal to the total unfavorable IRS adjustment(s) less: (i) all fees owed to EZ-ERC and/or affiliated entities; and (ii) a retention equal to 10% of the total ERC applied for. The retention is akin to a “deductible” that you might encounter on an insurance policy.

The Adjustment Amount includes any penalties or interest on penalties imposed or assessed by the IRS, provided such penalties and interest do not cause the Adjustment Amount to be greater than the total ERC claim. In general, such penalties should be capped at 20% of the ERC claim; and therefore, it is safe to assume that penalties and interest on such penalties should not cause the Adjustment Amount to be greater than the ERC claim.

The CCG does not protect you against adjustments due to: (i) legislative changes after the CCG is issued; (ii) omitted, untrue or inaccurate information provided by Client or their representatives; (iii) inconsistent treatment or reporting by Client (e.g., failure to make necessary income tax adjustments); (iv) fraudulent or criminal conduct of Client; (v) administrative errors made by the IRS or U.S. Postal Service in calculating, processing, and delivering the physical refund checks; and (vi) failure by Client to properly notify EZ-ERC of the proposed adjustment(s).

The CCG expires on the date the statute of limitations lapses for the IRS to examine your amended payroll tax filing. For calendar year 2020 quarters, this date is April 15, 2024. For the first and second quarters of 2021, this date is April 15, 2025. For the third and fourth quarters of 2021, this date is April 15, 2027.

Qualifying EZ-ERC Clients may be offered the CCG at the time the Client Engagement Letter (“CEL”) is executed (with limited exceptions after the CEL is executed, but in all cases before the ERC claims are remitted to the IRS).

EZ-ERC will evaluate Client’s industry, potential or actual ERC amount, and the availability and sufficiency of certain source documentation to evaluate whether a particular Client may qualify for the CCG. In the event EZ-ERC offers the CCG to a Client prior to signing the CEL and later determines that Client is no longer qualified (i.e., after conducting functional interviews with Client and retrieving additional data), Client will reserve the right to cancel EZ-ERC’s CEL in full, or otherwise come to a mutually agreeable path forward.

For Clients that EZ-ERC does not prequalify for the CCG at the time the CEL is signed, EZ-ERC reserves the right to offer the CCG at a later date.

If EZ-ERC offers the CCG at the time the CEL is signed, EZ-ERC will offer a combined fee of 20% or 25%, which includes EZ-ERC’s regular scope of ERC consulting services, as well as the CCG. The 20% fee (“Option A”) will apply to Client opting to pay the fees in full at the time the Form 941-Xs are sent to the IRS. The 25% fee (“Option B”) will apply to Clients seeking to defer EZ-ERC’s fees until they receive their ERC refund checks. A 7.5% deposit will be required under Option #B (similar to the premium paid on an insurance policy) at the time the ERC claims are remitted to the IRS.

To the extent that the CCG is offered after the CEL is signed, the CCG fee may vary from 8 – 12%, depending on the specific Client facts and circumstances, and will be incremental to the Fee Option selected pursuant to the traditional CEL.

The CCG is not a regulated insurance product, but rather a financial guarantee.

Generally, the CCG will be issued by Waverly Guaranty LLC, an affiliate of EZ-ERC, which is backed by Waverly Risk Advisors Corporation, a licensed, regulated, insurance company in the State of Delaware, which carries sufficient capital reserves, as determined by a third-party actuary. At EZ-ERC’s option, the CCG may be substituted for a tax insurance policy issued by Certa Insurance, the tax insurance division of Lloyd’s of London, which maintains an A+ (Strong) credit rating from Standard & Poor’s. To the extent EZ-ERC substitutes the CCG with a tax insurance policy from Certa, EZ-ERC will ensure each respective Client receives the equivalent risk coverage and outcomes that would otherwise be provided through the CCG (i.e., the Adjustment Amount will be computed in an equivalent manner).

A Client that is offered a Certa tax insurance policy will be subject to the same fee arrangements as those seeking a CCG. However, Client will be required to remit a portion of their up-front payment discussed above directly to Certa.

No, the CCG is not the same as EZ-ERC’s E&O professional liability insurance or similar products. While we are aware of some ERC service providers claiming that their E&O policies will cover a Client’s financial losses related to their ERC claims, we believe these claims to be misleading (particularly in light of these service providers advertising that their services are 100% risk free as a result of those policies).