The U.S. government has already taken a financial hit of over $100 billion dollars in relation to iffy ERC credits, and they’re prepared to take swift action against all improperly claimed credits. Those companies out there that are taking advantage of business owners who aren’t clear on the legalities involved or that are taking advantage of the credit itself have been put on notice, but many show no signs of slowing down.
The IRS has published many notices warning businesses not to turn to scam or otherwise insufficient ERC filing services. The way these less-than-forthright companies generate profits is by charging large fees upfront or by employing a contingency fee that is based on the credit amount received. The IRS is on the record as not only actively auditing suspicious claims but also conducting criminal investigations in relation to fraudulence.
The law is clear – tax payers have a non-negotiable responsibility to only include factual information on their tax filings. Ineligible businesses that claim the ERC credit anyway can face serious penalties and interest – in addition to being required to repay the credit.
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.