IRS Warns of Improper ERC Claims

• November 15, 2022
• Andrew Bollman

We’ve discussed the employer retention credit (ERC or ERTC) a fair amount of the last few months, and how for the most part it can be difficult for transportation companies to qualify for the credit due to increased revenues with rising freight rates in 2020 and 2021, and the fact that it was an essential business through the pandemic. However, there has been an increase in third party companies advertising to transportation companies that they definitely qualify for these credits. These companies often promise companies qualify for the ERC while charging a large up-front fee or contingent fee based on the credit.

Remember that qualifying for the ERC is not always black and white, it’s normally situational and requires some interpretation of IRS guidance. Also, if an ERC is claimed through an amended payroll tax return, the statute of limitations on that claim is extended from three years to five years. So, taxpayers are giving the IRS an additional two years to potentially examine the credit, increasing a taxpayer’s potential exposure. The IRS also recently hired 300 new auditors for these ERC claims.

The IRS is reminding taxpayers that they should be cautious of these advertised schemes and solicitations of promising tax savings/credits that could be too good to be true. They reiterated that taxpayers are responsible for information reported on their returns, and that improperly claiming an ERC could result in taxpayers having to repay the credit, along with potential penalties and interest.

Here’s a link to the IRS news release.

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