Well this was inevitable...
The Internal Revenue Service (IRS) has issued a warning about promoters making false claims regarding the Employee Retention Credit (ERC), adding it to their annual Dirty Dozen list of tax scams. The IRS has seen an increase in aggressive ERC promoter advertisements on radio and the internet, misleading individuals and businesses into thinking they are eligible to claim the ERC.
As a reminder, the ERC is only available to eligible businesses that continued paying employees during the COVID-19 pandemic or had a significant decline in gross receipts during the eligibility periods. The IRS encourages people to report tax-related, illegal activities relating to ERC claims and individuals promoting abusive tax schemes. It is essential to work with trusted tax professionals when filing for the ERC and to be cautious of any offers that sound too good to be true.
Additionally, some third parties fail to explain that only recovery startup businesses are eligible for the ERC in the fourth quarter of 2021. Furthermore, some advertisements collect taxpayers' personally identifiable information in exchange for false promises, which scammers then use to conduct identity theft. These examples show how some ERC promoters ignore the rules and regulations set forth by the IRS.
ERT Credit has followed all IRS regulations since the inception of the ERC, with over 1400 businesses successfully claiming the credit. ERT Credit does not advertise or promote the ERC and only works with clients referred by tax professionals or past clients.
Read the IRS Notice Here
To report an abusive tax scheme or a tax return preparer, people should mail or fax a completed Form 14242, Report Suspected Abusive Tax Promotions or Preparers and any supporting materials to the IRS Lead Development Center in the Office of Promoter Investigations.
Internal Revenue Service Lead Development Center
24000 Avila Road
Laguna Niguel, California 92677-3405
Alternatively, taxpayers and tax practitioners may send the information to the IRS Whistleblower Office for possible monetary reward.
For more information, see Abusive Tax Schemes and Abusive Tax Return Preparers.
The Dirty Dozen is a collaboration with the Security Summit initiative. Working together as the Security Summit, the IRS, state tax agencies and the nation’s tax industry have taken numerous steps over the last seven years to warn people to watch out for common scams and schemes during tax season.