
ERTC Fraud-Beware!
2022 Tax year has had minimal changes to tax laws. That’s a sigh of relief for us tax preparers as the past couple of years have had many changes due to covid, and some were given midway through the tax season. So, we are grateful for that! One thing that has stood out so far is the increasing enforcement efforts by the IRS and in particular the audit activity regarding the ERTC (Employee Retention Tax Credits). Many business owners have been contacted about having a third party calculate an “Employee Retention Credit” amounting to tens and even hundreds of thousands of dollars. We are finding that fraud in that industry is rampant, the scam artists are preying on your gullibility over a complex tax matter, and that the 3rd party providers are not telling you important facts such as:
- Owner and owner family wages do not qualify
- Tax returns must be amended to reduce wage deductions
- When returns are amended to reduce deductions, you will owe additional tax and penalties for late payment
- The supposed “supply chain” issues do not exist unless (IRS Notice 2021-20) there has been at least a 10% reduction in hours or revenues, and the disruption results in decreased profits
- The claims “Your accountant didn’t know about this” are classic indicators of a scam perpetrated upon the uninformed business owner
- Ask yourself how long this “expert” company has really been in business
- And, most importantly, when the IRS audit comes, and it will, are you prepared to lose your company over this?
Bluntly, unless your sales revenues dropped substantially (50% in 2020 or 20% in 2021) there is a good chance you did not qualify for ERTC, no matter what you have heard or been told.