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ERTC Scams Still Exist

During the COVID-19 pandemic, the U.S. Government created the Employee Retention Tax Credit (ERTC) to provide economic relief to businesses and not-for-profit organizations that continued paying employees while they suspended or reduced operation or experiencing a significant reduction in gross revenue due to the pandemic.

While more than two years have passed since ERTC eligibility expired, unscrupulous marketers are still attempting to convince organizations that they are able to file for the credit, regardless of whether they are actually entitled to it. According to the IRS, these promoters are “wildly misrepresenting and exaggerating who can qualify for the credits.” As a result,  the IRS is scrutinizing ERTC claims more closely.

The ERTC is a legitimate tax credit that qualifying organizations can claim by filing an amended Form 941. However, there are specific eligibility criteria for claiming the credit. The organization must have:

  • Sustained a full or partial suspension of operations due to orders from a government authority because of COVID-19 during 2020 or the first three quarters of 2021
  • Experienced a significant decline in gross receipts during 2020 or the first three quarters of 2021
  • Qualified as a recovery startup business for the third or fourth quarter of 2021

    • Unscrupulous promoters are lying about eligibility requirements, leaving out key details or making broad arguments suggesting that all employers are eligible for the credit. Their aggressive marketing tactics have appeared online, in TV and radio commercials, and in direct mail in the form of letters made to look like official IRS correspondence.

    Organizations that improperly claim the ERTC are required to repay the money they received from the credit, potentially including penalties and interest. As the IRS suggests, ignoring unsolicited advice from third-party promoters and instead working with a trusted tax professional is the best way to protect your business.

    The tax professionals at Dembo Jones can help ensure that your ERTC claims are legitimate and appropriate, and are available to help guide you through the process. Give us a call.