How to Spot a Scam Regarding Employee Retention Credit

Since the Coronavirus Aid, Relief, and Economic Security Act (CARES) created the Employee Retention Credit, a tax credit against Social Security payroll taxes, unscrupulous actors have exploited business owners' desire to avoid layoffs.



The IRS claims that they market their services to businesses to quickly secure the benefit for their organizations by capitalizing on the requirements and complexity of the credit's rules. Of course, a lot of businesses are ineligible for the ERC program, and the offenders are aware of this. In the end, businesses suffer financial losses due to exorbitant fees, while con artists profit.

Choose a seasoned and established company

By definition, a startup company that relies only on recovery has a short lifespan in mind. Its scope is limited, and it is almost certainly motivated by the desire to make quick money off companies that might not be eligible.

Such an enterprise has a higher likelihood of producing an ERC scam. Undoubtedly, there are new companies that assist employers with the IRS morally and competently. Nevertheless, many con artists are committing ERC tax credit fraud to deceive employers.

Verify that the Company Provides ERC Eligibility Proof

As previously mentioned, offering free money, a credit, or a refund without knowing enough about your business is a warning sign for dishonest people. For a business to be eligible for an ERC credit, certain requirements must be met. These concern the relationships between the pandemic and significant declines in cash flow, as well as quarterly totals for salaries and wages and calculated compensation for specific employees.

Demand personal communication via phone or in person

It is simpler to conceal incompetence and ulterior motives when communication takes place only online. Personal interactions allow for prompt clarification and follow-up.

This direct, one-on-one method of communication exposes those who are promoting advertised schemes. Any direct solicitations that are refused should be regarded with suspicion. Furthermore, it shows that the promoter wants to hide its physical address in the unavoidable scenario that the ERC claim is denied after the fee has been paid.

Find out about IRS Audit Defense

If the IRS decides to audit your payroll records or payroll tax returns, you can kiss your ERC advance claim goodbye. If the organization discovers an error with a filing after the fact, legitimate accountants and tax preparers will still be there for their clients.

Any penalties incurred as a result of a false claim or sloppy preparation are the client's issue, according to the con artist. A business owner won't receive any assurance of audit assistance, therefore, from dubious ERC credit fraud practitioners who pose as authorities on ERC audits.

To Be Paid for the Service Must Be Clearly Described

How is payment made to a solicitation service? So, when does it collect its fees? When is an ERC claim submitted? Half following filing and half following credit approval? Until the credit is verified and used, or none? The responses to these queries distinguish more reliable tax advisors from those who engage in unethical behavior while claiming to be legitimate.

Make them justify for their eligibility to receive the employee retention credit

If a company promises that taxpayers will be eligible for the ERC, it would be wise for it to detail its experience and past success in this field. specificity from their representatives is required.

Do they have any credible testimonials demonstrating how well they assist with business filing? Has any member of their staff held a position with or for the IRS or another government organization? What do their staff's education and training consist of? What is the ratio of victories to defeats? What credentials and authorizations do they possess?

Many con artists boast about playing a good game, but when confronted with evidence, they back off.