The Internal Revenue Service continues to warn businesses to watch out for aggressive marketing by nefarious actors involving the Employee Retention Credit (ERC) and urges people to watch out for red flags that can signal trouble.
The ERC is a legitimate pandemic-era tax credit but as time passes the credit has been increasingly the target of aggressive marketing to businesses that may not qualify for the credit. If a business or tax-exempt group should use one of the promotions for their ERC submission, it could find itself in a much worse position if it has to pay back the credit that was never claimed in the first place.
To avoid this, properly claiming the ERC requires specific eligibility. Employers can claim the ERC on an original or amended employment tax return for qualified wages paid between March 13, 2020, and Dec. 31, 2021. Make sure the credit is ordered from an appropriate government authority, providing proof of having experienced a significant decline in gross receipts during 2020 or the first three quarters of 2021, or employers must be qualified as a recovery startup business for the third or fourth quarters of 2021.
The IRS provides ways warning signs and how businesses avoid them, how the promoters lure victims into using their “services” to claim their ERC, how businesses and others can protect themselves, and where to report ERC abuse to the IRS.
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