The IRS continues to alert taxpayers of misinformation regarding the Employee Retention Credit (the “ERC”) and the serious consequences of filing improper ERC claims. On July 25, the IRS hosted a Webinar for Tax Practitioners, which covered an overview of the ERC program, key areas of compliance, how to spot and report ERC fraud, and tips on how to steer your clients away from it. The IRS also included ERC scams as part of its “dirty dozen” list of fraudulent tax schemes for 2023.

The ERC is a legitimate tax credit designed to help businesses and tax-exempt organizations that continued to pay their employees while being shut down by government order during the COVID-19 pandemic. No sooner had the ERC program begun, however, than third-party promoters started advertising “risk-free” applications for the credit. Some of these promoters are legitimate and carefully analyze and document their analysis. However, certain promoters do not evaluate the taxpayer’s overall tax situation or qualification for the credit.

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