ERC Fraud has already cost the federal government more than one hundred billion dollars. As such, The IRS has been ramping up swiftly to take strong action against these companies and the taxpayers who have improperly claimed the credit.
The IRS has already issued multiple warnings to the public not to use these services. In March 2023, the IRS wrote, “The IRS and tax professionals continue to see third parties aggressively promoting these ERC schemes on radio and online. These promoters charge large upfront fees or a fee that is contingent on the amount of the refund….The IRS is actively auditing and conducting criminal investigations related to these false claims. People need to think twice before claiming this."
Furthermore, the IRS has made itself very clear, stating, “Taxpayers are always responsible for the information reported on their tax returns. Improperly claiming the ERC could result in taxpayers being required to repay the credit along with penalties and interest.”
Once misleading/false ERC credit claims made the IRS Dirty Dozen List, tax attorneys started ramping up to defend taxpayers against the IRS. The Dirty Dozen List, is the IRS’s annual published list of tax scams that the government considers to be the “worst of the worst.” Indeed, the IRS has responded by using its internal resources to create audit groups that are specially trained to audit ERC claims. We spoke with one auditor recently, who confirmed her job was to audit as many taxpayers as possible.