Michele Weiss recently published an article in the Daily Journal entitled “The IRS has ramped up its efforts to catch tax fraudsters involved in Employee Retention Credit misuse.” In this article, Michele analyzes the current state of the Employee Retention Credit.
The IRS has stepped up its enforcement efforts to crack down on abuse in Employment Retention Credit (“ERC”) claims. Promulgated by Congress to provide Covid-relief to business suffering economically from the repercussion of the global pandemic, the ERC was abused by fraudsters and credit mills who convinced clients to file claims that were incorrect or even invalid.
The IRS has offered opportunities to taxpayers to withdraw their potentially invalid claims and/or return their erroneous ERC refunds. The IRS has also slowed down processing ERC claims while increasing its enforcement efforts. Unfortunately, taxpayers with valid claims have been waiting for years to receive their ERC refunds.
Taxpayers with valid ERC claims can file suits in federal court to proactively pursue their ERC claims. Taxpayers contemplating filing a suit for their ERC claims should conduct a due diligence review of their ERC claims to ensure that their ERC claims are valid and correctly computed. Beside the blatantly erroneous claims prepared by promoters, taxpayers could have errors in computing their ERC claims, including, but not limited to, failing to reduce qualified wages used to compute their ERC claims by the qualified wages used to compute their PPP loans; including owner compensation in their qualified wage calculation; failing to aggregate gross receipts and employee count from related businesses; and/or incorrectly applying the partial suspension rules.
A fuller discussion of these issues is contained in the article which is available at the following link:
For more information regarding the ERC, you can contact Michele at:
mweiss@hsdtaxlaw.com or 310-550-6200.