ERC Fraud Prevention & Resources
Learn What Business Owners Need to Know About Avoiding (and Defending Against) ERC Fraud Allegations
While the Employee Retention Credit (ERC) was only available for the 2020 and 2021 tax years, businesses that failed to claim the credit during the COVID-19 pandemic still have the opportunity to do so. However, as the Internal Revenue Service (IRS) and other federal authorities are actively targeting ERC recipients in criminal fraud investigations, businesses claiming the ERC need to do so very carefully. Work with a well-versed Boston criminal tax attorney to get the most current information affecting your potential case.
Avoiding Fraud When Claiming the Employee Retention Credit (ERC)
To avoid fraud when claiming the Employee Retention Credit, business owners need to begin by assessing their companies’ eligibility. Not all businesses qualify for the ERC, and the eligibility criteria changed from 2020 to 2021. With this in mind, a company may be eligible to claim the ERC for the 2020 tax year, the 2021 tax year or both if:
- The business fully or partially suspended its operations due to a government order related to the COVID-19 pandemic;
- The business experienced a sufficient decline in gross receipts; and/or,
- The business qualifies as a “recovery startup business” under the ERC legislation.
Each of these qualification criteria is subject to several specific rules and requirements, and business owners must carefully review the applicable definitions and conditions to determine their companies’ eligibility. Our IRS criminal tax lawyer can assist with this review and advise you accordingly.
If a business is eligible for the ERC, then the next step is to calculate the credit for each tax year. This also requires careful consideration of a variety of different factors. Some examples of the factors that business owners need to consider when calculating the ERC include:
- The business’ eligible employees
- The business’ qualified wages and qualified health plan expenses
- Whether the business paid qualified wages with Paycheck Protection Program (PPP) funds
Again, these are just examples. Calculation of the ERC has proven to be a point of confusion for many business owners, and this, in turn, has led to many businesses facing scrutiny for ERC fraud. When determining their companies’ eligibility and calculating the ERC, business owners need to rely on the advice of qualified and experienced professionals. Unfortunately, many business owners have relied on online “service providers” that promise to help any business qualify for the ERC—and many of these business owners are now facing severe penalties as a result. Contact our IRS criminal ERC lawyer for immediate assistance with your concerns.
ERC Resources for Business Owners in Boston
The IRS has published several ERC resources for business owners. Importantly, while the IRS offers these resources as a source of guidance, the IRS makes clear that business owners cannot rely on these resources exclusively when determining their eligibility or calculating the ERC:
- Employee Retention Credit – Information for Business Owners
- Employee Retention Credit - 2020 vs. 2021 Comparison Chart
- IRS Warning Regarding False ERC Claims
Contact a Boston Criminal Tax Attorney at Thorn Law Group for More Information
If you have questions about ERC compliance or need representation for an ERC fraud audit or investigation, we invite you to get in touch with a skilled Boston criminal tax attorney. To arrange a confidential initial consultation with Kevin E. Thorn, Managing Partner at Thorn Law Group in Boston, please call 617-692-2989.