The IRS continues to see third parties aggressively promoting Employee Retention Credit (ERC) schemes. In News Release IR-2023-105, the IRS renewed an alert for businesses and tax exempt groups to watch out for warning signs of aggressive Employee Retention Credit marketing.
These promoters may lie about eligibility requirements. In addition, taxpayers using these companies could be at risk of someone using the credit as a ploy to steal their identity or take a cut of the taxpayer’s improperly claimed credit.
ERC is important pandemic-era credit and valuable if claimed properly, but could result in repayment and substantial penalties and interest if not. The IRS has trained auditors examining ERC claims posing the greatest risk. The IRS Criminal Investigation division is working to identify fraud and promoters of fraudulent claims. Illegitimate claims slow down processing of the credit for everyone.
The IRS also reminds businesses, tax-exempt groups, and others about simple steps to take to protect themselves from making an improper ERC.
- Work with a trusted tax professional; don’t rely on the advice of those soliciting these credits.
- Don’t apply unless you believe you are legitimately qualified for this credit. Details about the credit are available at IRS.gov | Employee Retention Credit.
Reporting ERC fraud:
Employers can report illegal tax-related ERC claims and activities by submitting a completed Form 14242, Report Suspected Abusive Tax Promotions or Preparers (PDF), and any supporting materials to the IRS Lead Development Center in the Office of Promoter Investigations. The fax telephone number and mailing address are on the form.
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