- ShindelRock - https://www.shindelrock.com -

Compliance risk for people and businesses claiming Employee Retention Tax Credit improperly

[1]The Internal Revenue Service today issued a renewed warning urging people to carefully review the Employee Retention Credit (ERC) guidelines before trying to claim the credit as promoters continue pushing ineligible people to file.

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. And the promoters may not inform taxpayers that wage deductions claimed on the business’ federal income tax return must be reduced by the amount of the credit.

The IRS has been warning about this scheme [2] since last fall [3], but there continue to be attempts to claim the ERC during the 2023 tax filing season. Tax professionals note they continue to be pressured by people wanting to claim credits improperly. The IRS Office of Professional Responsibility is working on additional guidance for the tax professional community that will be available in the near future.

Businesses should always be cautious of advertised schemes and direct solicitations promising tax savings that are too good to be true. If you have any questions about claiming a business tax credit, contact a ShindelRock tax professional. [4]