IRS Issues Warning Signs of ERC Scams

The IRS recently released new guidance on the warning signs of Employee Retention Credit (ERC) scams.

Further, they reminded that anyone who erroneously claims the credit must pay it back with penalties and interest. Be on guard for the warning signs of a scam, and rely on the advice of your trusted tax professional.

• Unsolicited calls and ads, especially those with an “easy application process."
  
  
• Large upfront fees.
  
  
• Fees are based on a percentage of the amount claimed.
  
  
• Statements that you have nothing to lose by claiming the credit.
  
  
• They are pressuring you to ignore the advice of your tax professional.
  
  
• Aggressive marketing.
  
  
• Direct mailing.
  
  
• They leave out key details.
  
  

The ERC is a highly complex credit to qualify for. How would they know if you qualify for additional ERC funds? Are they licensed CPAs? Do they have access to your gross receipts, year over year and quarter over quarter? Do they know about your PPP loans? If not, how would they even know if you qualify? Odds are, they don't!

The bottom line is that any funding related to Covid relief will be scrutinized due to significant levels of fraud. Remember, if it sounds too good to be true, it is.

References

https://www.irs.gov/newsroom/learn-the-warning-signs-of-employee-retention-credit-scams

https://www.irs.gov/newsroom/irs-commissioner-signals-new-phase-of-employee-retention-credit-work-with-backlog-eliminated-additional-procedures-will-be-put-in-place-to-deal-with-growing-fraud-risk