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Employee Retention Credit Fraud Alert

Carla Medrano
June 21, 2022

The Employee Retention Tax Credit (“ERC”) is on many business owners’ minds. Originally introduced as part of the CARES Act, it was intended to encourage employers to keep employees on the payroll as they navigated the unprecedented effects of COVID-19. Since its inception, the rules around eligibility have changed several times and are often misunderstood.

As a result, there are several companies offering to calculate ERC in exchange for a large percentage of the “take.” Due to the limited IRS guidance on the subject, some are taking a very liberal interpretation of the rules. They are not wrong in all cases, but many are interpreting the law in a way that is not accurate. And in some cases, there are some bad actors that are committing outright fraud. The IRS Criminal Investigation division recently raided a Houston company suspected of fraudulently preparing credit claims. If you are approached by a company offering something that sounds too good to be true, it probably is!

As with all complex tax issues, we are here to help! Your Beaird Harris tax advisor is evaluating your eligibility for the ERC as part of our 2021 return preparation process. In the meantime, do not hesitate to reach out with any questions. This is a great program for small businesses, and we want to help our clients take advantage of it.

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