5 Red Flags of Fraudulent ERC Providers

The IRS has issued increasing warnings urging taxpayers to beware of ads that promise big money for claiming the employee retention tax credit. 

These five tips can help ensure a taxpayer does not become a victim of an unscrupulous ERC promoter:

1. Beware of Aggressive Marketing: Radio, television, online ads, unsolicited calls or direct mailings made to look like official IRS correspondence promising “$26,000 per employee” and an “easy application process,” are all tactics to be wary of. 
2. Beware of Quick Determinations of ERC Eligibility:  ERC eligibility cannot be determined in minutes; determining eligibility for a claim involves reviewing an organization’s gross receipts and/or conducting an in-depth analysis of “more-than-nominal” impacts from government orders. 
3. Beware of Firms Unwilling to Sign as a Paid Preparer: If preparers refuse to prepare and sign the amended Forms 941-X, the taxpayer is taking on the sole risk for the claim. 
4. Beware of Fees Based on a Percentage of the Refund: Fees based on a percentage of the refund incentivize providers to calculate higher ERC claims. 
5. Beware of Providers Who Do Not Provide Documentation: Claiming the ERC is a complicated procedure that requires careful review of federal, state and local orders to determine eligibility as well as complex entity aggregation and full-time employee rules. Providers should be able to provide detailed documentation citing specific government orders that support a taxpayer’s eligibility and their calculations. 

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