Employee Retention Tax Credit

08 Mar 2023

IRS Issues Renewed Warning On Employee Retention Credit

IRS issues renewed warning on Employee Retention Credit claims; false claims generate compliance risk for people and businesses claiming credit improperly…

The Internal Revenue Service today issued a renewed warning urging people to carefully review the Employee Retention Credit (ERC) guidelines before trying to claim the credit as promoters continue pushing ineligible people to file.

The IRS and tax professionals continue to see third parties aggressively promoting these ERC schemes on radio and online. These promoters charge large upfront fees or a fee that is contingent on the amount of the refund. And the promoters may not inform taxpayers that wage deductions claimed on the business’ federal income tax return must be reduced by the amount of the credit.

“While this is a legitimate credit that has provided a financial lifeline to millions of businesses, there continue to be promoters who aggressively mislead people and businesses into thinking they can claim these credits,” said Acting IRS Commissioner Doug O’Donnell. “Anyone who is considering claiming this credit needs to carefully review the guidelines. If the tax professional they’re using raises questions about the accuracy of the Employee Retention Credit claim, people should listen to their advice. The IRS is actively auditing and conducting criminal investigations related to these false claims. People need to think twice before claiming this.”

The IRS has been warning about this scheme since last fall, but there continue to be attempts to claim the ERC during the 2023 tax filing season. Tax professionals note they continue to be pressured by people wanting to claim credits improperly. The IRS Office of Professional Responsibility is working on additional guidance for the tax professional community that will be available in the near future.
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Written by TaxConnections Admin | Posted in Employee Retention Tax Credit • IRS Notice

25 Oct 2022

IRS Warns Employers To Be Aware Of Third Parties Promoting Improper Employee Retention Credit Claims

IRS warns Employers to be aware of third parties promoting improper Employee Retention Credit claims.

WASHINGTON — The Internal Revenue Service warned employers to be wary of third parties who are advising them to claim the Employee Retention Credit (ERC) when they may not qualify. Some third parties are taking improper positions related to taxpayer eligibility for and computation of the credit.

These third parties often charge large upfront fees or a fee that is contingent on the amount of the refund and may not inform taxpayers that wage deductions claimed on the business’ federal income tax return must be reduced by the amount of the credit.

If the business filed an income tax return deducting qualified wages before it filed an employment tax return claiming the credit, the business should file an amended income tax return to correct any overstated wage deduction.

Written by TaxConnections Admin | Posted in Employee Retention Tax Credit

26 Aug 2021

Covid Relief For Employers: Employee Retention Tax Credit

By now, just about everyone has heard of PPP loans, EIDL Loans, and the various grants available to employers that have been negatively impacted by COVID-19. However, there is another COVID relief program that many people don’t know about called the Employee Retention Tax Credit (ERC). It’s largely unknown because when it was first rolled out it didn’t apply to a lot of people (you couldn’t claim the credit if you got a PPP loan), but the rules have since changed. Under the new ERC rules, many businesses that were impacted by COVID are entitled to tens, or even hundreds of thousands of dollars in COVID relief funds – over and above any PPP or EIDL loans they might have already received.