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Don’t Fall for Employee Retention Credit Scams

If you are a small business owner, your social media feed has almost definitely been filled with posts about “thousands of dollars of free ERC money” that promise to take advantage of the Employee Retention Credit for 2021. The ERC is a refundable tax credit designed to help businesses that have been adversely affected by the COVID-19 pandemic. It was a lifeline to businesses that struggled to stay open and keep their employees. Unfortunately, scammers have been taking advantage of this program, and the number of scams is on the rise—and may continue to rise for the next two years.

How ERC Scams Work

ERC scams typically start with a phone call or email from someone claiming to be a representative from the IRS or the Small Business Administration (SBA). The scammer will tell the business owner that they are eligible for the ERC and will offer to help them apply for the credit. In exchange for their services, the scammer will ask for a fee or personal information, such as bank account details or Social Security numbers.

Once the scammer has the business owner's information, they will file a fraudulent ERC claim on behalf of the business. The scammer will then disappear, leaving the business owner with a hefty tax bill and no way to access the promised ERC funds.

How to Avoid ERC Scams

There are several steps business owners can take to avoid ERC scams:

  1. Be wary of unsolicited phone calls or emails. If someone contacts you claiming to be from the IRS or SBA, verify their identity before providing any personal information. You can do this by calling the official IRS or SBA phone number or by visiting their official website.

  2. Don't pay for ERC application assistance. The IRS and SBA do not charge businesses to apply for the ERC. If someone asks for a fee to help you apply for the credit, it is likely a scam.

  3. Keep your personal information safe. Never provide your bank account details or Social Security number to someone you don't know or trust.

  4. Work with a reputable tax attorney. A tax attorney can help you navigate the ERC program and ensure you are in compliance with payroll taxes.

How Safeguard Law, PLLC Can Help

Safeguard Law, PLLC is a tax law firm that specializes in helping businesses navigate the ERC program and ensure they are in compliance with payroll taxes. Our experienced attorneys can:

  1. Review your business's eligibility for the ERC and help you apply for the credit.

  2. Ensure your business is in compliance with payroll taxes and other tax obligations.

  3. Help you respond to IRS notices or audits related to the ERC.

  4. Represent you in legal proceedings related to the ERC or other tax issues.

The ERC program has provided much-needed relief to businesses affected by the COVID-19 pandemic. However, it has also become a target for scammers looking to take advantage of vulnerable business owners. By being vigilant and working with a reputable tax attorney, businesses can protect themselves from ERC scams and ensure they are in compliance with payroll taxes. If you need help navigating the ERC program or have questions about your business's tax obligations, contact Safeguard Law, PLLC today.