IRS Increases Pressure on Businesses That Claimed Employee Retention Tax Credits
The Internal Revenue Service (IRS) recently issued a news release identifying five new signs that a business’s Employee Retention Tax Credit (ERC) may be incorrect. It has also begun issuing a third round of letters denying ERC claims. New compliance initiatives are coming and criminal investigations of ERC claims are on the rise, with the government winning cases that go to trial. For background, the ERC is a legitimate, refundable tax credit designed to help businesses that continued to pay employees while they were shut down due to the COVID-19 pandemic or that experienced a significant decline in gross receipts in 2020 and 2021. While Congress designed the ERC with the laudable goal of helping businesses survive the pandemic by encouraging them to keep employees on their payrolls, ERC fraud has run rampant and unscrupulous promoters have pushed businesses that do not qualify for the credit to file improper ERC claims . For over two years, the IRS has engaged in...