IRS Warns Employers of Third-Party Schemes for the Employee Retention Credit (ERC)

The IRS is warning employers to be careful of third parties who are telling them to claim the Employee Retention Credit (ERC) when they might not actually qualify. Some of these third parties charge high fees or fees based on the amount of the refund, and may not tell employers that they need to reduce the amount of wage deductions on their federal income tax return.

The ERC is a credit for businesses that kept paying their employees during the COVID-19 pandemic or had a big drop in revenue from March 13, 2020 to December 31, 2021. To qualify, employers must have had to close down or had a big decrease in revenue because of COVID-19. Employers who think they qualify can claim the credit on their employment tax return.

The IRS is reminding employers to be cautious of any schemes or offers that seem too good to be true, and to make sure they qualify for the credit before claiming it. If an employer claims the credit when they don’t qualify, they may have to pay it back with penalties and interest.

Employers can find more information on the IRS website about the qualifications and how to claim the ERC. If they suspect any illegal activities related to the ERC, they can report it to the IRS.