The IRS is alerting the public about the Employee Retention Credit scams promotion that overstate eligibility and credit amounts.
Employee Retention Credit
The Employee Retention Credit (ERC) was made under the CARES Act and extended under the American Rescue Plan Act. Businesses that chose to keep their employees during the uncertain economic times of the pandemic might meet the criteria for claiming a tax credit based on each employee.
The ERC was created under the CARES Act and extended under the American Rescue Plan Act. The credit is available to businesses that were compelled to close because of government directives in the initial phases of the outbreak.
Employee Retention Credit Scams
In the past few years, there have been many cases of the Employee Retention Credit scams, mainly because the guidelines for the credit were not very clear. The ERC has gone through significant changes since it was first introduced in the CARES Act in March 2020. In just 2021, it was adjusted three separate time. Employee Credit scams are being actively promoted to business owners with the promise of effortlessly benefiting from government pandemic assistance.
Frequently, scammers demand a fee to assist business owners in submitting ineligible credit claims, disappearing before the IRS disqualifies the claims. According to CNBC News, last October, the IRS alerted business owners to stay vigilant regarding third parties promoting inaccurate Employee Retention Credit (ERC) claims. This alert was reiterated in March of this year, as the IRS released a statement noting that there are still promoters who are actively misleading individuals and businesses by falsely suggesting they are eligible for these credits.
The IRS advises taxpayers to approach unsolicited advertisements about tax credits with caution. Be particularly cautious of those that promise simple application processes and demand significant upfront fees. The IRS encourages people to contact their Criminal Investigations Department if they think they’ve been the victim of a scam.