The Internal Revenue Service says it will not process any new Employee Retention Tax Credit Claims from businesses this year as it continues to crack down on fraudulent claims, Inc. reports.
The tax credit was first created by Congress in March 2020 as part of the $2.2 billion Cares Act to motivate employers to keep workers on staff. Three years later, the IRS is still flooded with about 3.6 million claims to the credit, many of which are from bad actors, the agency claims.
“The IRS is increasingly alarmed about honest small-business owners being scammed by unscrupulous actors, and we could no longer tolerate growing evidence of questionable claims pouring in,” IRS Commissioner Danny Werfel said in a statement last week. “The further we get from the pandemic, the further we see the good intentions of this important program abused.”
So-called ERC mills and other bad actors are to blame. These entities, which aren’t all unscrupulous, have popped up in the past year, reaching out to business owners to offer their services in helping entrepreneurs obtain an ERC payout.
The catch? The firms helping small businesses charge a percentage of the total refund, upwards of 25%, and oftentimes target businesses that don’t even qualify for the credit to begin with. Read the full story.