What You Can Do to Avoid Employee Retention Credit Scams

As published in IRS e-News for Small Business, Issue 2023-13

The IRS shared new steps the agency is taking to prevent honest taxpayers from falling victim to Employee Retention Credit (ERC) scams. The IRS continues to warn small businesses about aggressive promoters encouraging filing potentially ineligible claims. The IRS urges small businesses to check with a trusted tax professional about ERC instead of relying on a promotion company.

The steps include a moratorium on processing new ERC claims through at least the year’s end to prevent further abuse from predatory promoters using the ERC to scam businesses and organizations. Special withdrawal options and settlement initiatives are being prepared to help businesses that have been misled into claim the ERC. In addition, the IRS understands the valuable impact of the ERC credit and is working to process valid ERC claims filed before the moratorium, but with increased scrutiny.

New resources to help businesses navigate complex ERC

• Special eligibility checklist. The IRS created a new ERC eligibility checklist that provides a quick, high-level way for employers to figure out if they might qualify to claim the ERC or if they potentially need to resolve an improper claim. Given that some small businesses may have been misled by aggressive promoters, this checklist is an important reference tool to use along with checking with a trusted tax professional.
• New FAQs. The IRS also updated the Frequently asked questions about ERC with new questions and answers.

Be aware of the warning signs of aggressive promotion for the ERC. Aggressive tactics are a red flag.

Be sure to check IRS.gov/ERC for updates and ways to report a scam involving ERC, which is also sometimes called the Employee Retention Tax Credit or ERTC.