Employee Retention Credit Scams
Small businesses have recently fell victim to Employee Retention Credit scammers. To fool businesses, scammers will use tactics such as including the name of the victims’ bank on letters addressed to them regarding Employee Retention Credit (ERC). In these letters or messages, scammers will promise large amounts of money to businesses who are not eligible or who have not claimed ERC. The goal is to get businesses to claim credit they do not qualify for, ultimately leaving them to have to pay it back.
What is Employee Retention Credit (ERC)?
ERC is a refundable tax credit that is granted to small businesses that were shut down yet continued to pay employees during the COVID-19 pandemic.
How Do I Stay Aware of ERC Attacks?
Below are various platforms and methods that scammers will use to try to fool small businesses. By understanding ERC scammers’ techniques, you’ll know what to look out for.
Where do ERC scammers attack?
- Letters sent to your business address that may also reference reputable banks you use.
- Emails sent to you from third parties promising you money.
- Phone calls from schemers encouraging you to claim credit.
- Radio, TV, social and social media where misinformation about ERC is spread.
How do ERC scammers attack?
- Lying about your eligibility and prompting you to claim credit when you do not qualify for it.
- Charging a big fee to “assist” you in claiming credit
How do I protect my business from ERC attacks?
It is most important to understand that there is only one way to receive ERC which is through claiming it on a federal tax return. Never respond to mail, phone, calls, or emails that are sent to you about the ERC, even if your bank is listed as reference. When in doubt call or visit your local branch for help about ERC information. It is also helpful to recognize the eligibility requirements to discover if you’re eligible for ERC to begin with.
To learn more about eligibility or how to claim credit visit https://www.irs.gov/coronavirus/employee-retention-credit
How do I know if I’m eligible for ERC?
Only businesses are eligible for ERC. If you are an individual receiving a call to action regarding the ERC, it is a scam. Those who are eligible are typically employers that paid qualified wages to all employees between the time of March 12,2020 to January 1, 2022. However, eligibility may vary and it is important to understand the specific ERC conditions.
*It is best practice to consult your accountant to explore eligibility.