Claims for Employee Retention Credits (“ERCs”) have grown exponentially. A session in this week’s NYU 15th Annual Tax Controversy Forum (attended by Michelle E. Espey and Colleen Spain) addressed the impending threats of audit and investigation around the credits.
What is the ERC credit?
The ERC is a refundable tax credit for businesses that continued to pay employees while either shut down due to the COVID-19 pandemic or had significant declines in gross receipts from March 13, 2020 to Dec. 31, 2021.
Scams are on the Rise
The IRS and tax professionals are continuing to see aggressive broadcast advertising, direct mail solicitations and online promotions involving ERC schemes from third party promoters.
In late May, the IRS issued warnings to businesses and tax-exempt groups to watch out for the signs and misleading claims about the ERC.
What to do?
The IRS is urging anyone who is applying for the ERC to carefully review the official requirements before submitting a claim.
Thank you to Michelle E. Espey for this week’s tax tracker post!