If you’re a business owner, I am sure you have received letters in the mail and phone calls claiming something of the following:
“You qualify for $26,000 per employee! Call this 1-800 number and we will walk you through the process!”
There have been radio ads and social media posts claiming the same.
“If you owned a business during COVID, you are eligible for this money!”
These unsolicited phone calls and more are part of why the Employee Retention Credit (ERC) is #1 on the IRS 2023 Dirty Dozen List where they compile the most prevalent tax scams each year.
The ERC (sometimes referred to as the Employee Retention Tax Credit or ERTC) is a payroll tax credit for certain businesses who qualified due to shutdown or loss of income during 2020 and 2021. If your business did not experience a loss in gross receipts or shutdown due to government order, you do not qualify for the credit.
The IRS says:
“Taxpayers should be aware of aggressive pitches from scammers who promote large refunds related to the Employee Retention Credit (ERC). The warning follows blatant attempts by promoters to con ineligible people to claim the credit. The IRS highlighted these schemes from promoters who have been blasting ads on the radio and the internet touting refunds involving Employee Retention Credits. These promotions can be based on inaccurate information related to eligibility for and computation of the credit. Additionally, some of these advertisements exist solely to collect the taxpayer’s personally identifiable information in exchange for false promises. The scammers then use the information to conduct identity theft.”
In addition to the items the IRS lists above, these “ERC mills” typically charge high upfront fees (or even a portion of the refund) and often do not provide any assistance if the amended payroll tax return is questioned or audited by the IRS.
Now that the IRS has caught up on COVID filings, they have enlisted their Criminal Investigations division to assist with the enforcement of ERC rules and regulations. There have already been arrests related to fraudulent ERC filings, and the IRS expects there will be more as time goes on.
We advise you to be extremely wary of these scams. If you would like for us to look at your business’ situation in 2020 and 2021 in order to see if you qualify, we are happy to do so! We have helped a good number of qualified clients apply for and receive the credit. Please give us a call or send an email to Rebecca or Leslie to request a review of your books and records from 2020 and 2021.
The special statute of limitation for claiming the credit ends on April 15, 2024, for 2020 payroll tax filings and April 15, 2025, for 2021 payroll tax filings. We still have some time to file the amended returns if you qualify. But unfortunately, it also means the scammers still have more time to cold call and mail you misleading information.
IRS Dirty Dozen List 2023: https://www.irs.gov/newsroom/irs-wraps-up-2023-dirty-dozen-list-reminds-taxpayers-and-tax-pros-to-be-wary-of-scams-and-schemes-even-after-tax-season
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