IRS Warns of Employee Retention Credit Offers

The IRS is warning employers about third party companies offering assistance with the Employee Retention Credit program to businesses that may not qualify. 

The ERC program was designed to help businesses who continued paying employees during the pandemic when their company was shut down or experienced significant declines in gross receipts. 

There are specific guidelines for employer qualifications.

IRS officials said deal offers made by third party companies that employers should be wary about will often appear too good to be true. 

For example, some third parties are charging large upfront fees or a fee that is contingent on the amount of the refund. 

Officials said they often do not inform employers that federal income tax return wage deductions must be reduced by the amount of credit. 

Officials remind business owners taxpayers are always responsible for what is reported on their tax returns—and improper claims could result in penalties.

If a business filed an income tax return deducting qualified wages before it filed an employment tax return claiming the credit, officials said the business should file an amended income tax return immediately.