Employee Retention Tax Credit Fraud Lawyers | ERC Fraud Lawyers | ERTC Fraud Lawyers

The Employee Retention Tax Credit (ERTC) is a refundable tax credit which was authorized under the Coronavirus Aid, Relief, and Economic Security (CARES) Act in March 2020 to help businesses retain employees during the COVID-19 pandemic. This tax credit has become the source of a lot of scrutiny, recently, since so many fraudulent claims have been submitted for this tax credit. The IRS and many other agencies are now looking closely at ERTC fraud claims.

Key Features of the ERTC Program

• This program provides a refundable tax credit of up to $5,000 per employee for eligible employers.
• This tax credit applies to qualified wages paid after March 12, 2020 and before January 1, 2021.
• The program helps eligible employers get immediate access to the credit by reducing employment tax deposits.

Eligibility Requirements

To be eligible for the ERTC, employers must meet certain criteria listed below:

• Your business experienced a full or partial suspension of operations due to a COVID-19, or it experienced a significant decline in gross revenue compared to the same quarter in 2019.
• Had 100 or fewer full-time employees on average in 2019

The credit originally was applicable to qualified wages paid between March 13, 2020 and December 31, 2020. It was later extended and expanded by the Consolidated Appropriations Act of 2021 and the American Rescue Plan Act of 2021. This enabled more business owners to qualify. By some estimates, the overall amount of tax credits could be greater than PPP loans issued in terms of $ amount of value. Unfortunately, the ERTC program has been susceptible to fraud due to the lack of verification and the fast disbursement of funds.

Fraud Concerns

Some key fraud concerns that have been looked at include, but are not limited to:

Overstating Number of Employees

Employers have been caught exaggerating the number of W-2 employees to claim larger credits. The IRS found many cases where many claimed employees did not work for the company at all, or earned little to no wages.

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Legal Scenario: What Would You Do?

Scenario

The IRS has referred your case to the Criminal Investigation Division after an audit uncovered discrepancies in your tax returns.

Is this different from a regular audit?

Attorney's Answer

A CID referral means the IRS believes there may be criminal tax fraud, not just civil underpayment. Criminal tax charges carry prison time of up to 5 years per count. You need a criminal defense attorney at this stage.

This is general information only. Contact us for advice specific to your situation.

Claiming Employees Who Did Not Exist

Many employers have been caught claiming credits for fake employees who did not actually work for the company. Completely fabricated employee names and Social Security numbers were provided on tax forms.

Lying About Eligibility