Stay updated on all areas of tax filings and business processes affected by COVID-19

Learn more

The IRS is moving in on abusive ERTC claims

The IRS is moving in on abusive ERTC claims

Millions of businesses are falling victim to tax credit companies offering assistance in filing claims for employee retention tax credit (ERTC), and the IRS, Congress and the AICPA are concerned.

Many companies may qualify for ERTC, but abuse of this relief offer is producing significant fraudulent claims by tax credit companies in search of a quick profit from uninformed business owners. Business owners need to be on high alert if they are relying on government and/or supplier shutdowns to prove their claims. In the following information, we clarify the details you should know when evaluating your business’s qualification for ERTC.

ERTC is a refundable credit developed to aid businesses impacted by government shutdowns or declines in gross receipts during the COVID-19 pandemic. In early 2021, Congress revised the original ERTC rules to allow businesses that took advantage of the Paycheck Protection Program (PPP) to retroactively claim the credit for 2020. This revision came with specific qualifications for eligibility, but some of the tax credit companies offering assistance were not filing compliant claims for businesses. This has led to the need for IRS scrutiny of claims to ensure the accuracy of information businesses submitted.

Business owners should only work with a trusted CPA or accounting firm to ensure they check all the boxes for ERTC eligibility and retroactive claim filing. Relying on a tax credit company without accredited authority to guide you could cause negative ramifications for your business if you unknowingly had fraudulent claims filed by these incompetent entities.

ERTC was designed to help businesses that suffered from pandemic-related issues. If you want to confirm the eligibility of your business for this credit, ensure your filings are accurate, have confidence that they are compliant and avoid the scrutiny of the IRS, you’ll need to consult a CPA or accounting professional.