Tax Tip: Beware of Improper Employee Retention Credit Claim

The employee retention credit (ERC) is a refundable tax credit for businesses that continued paying employees while shut down due to the COVID-19 pandemic or had significant declines in gross receipts from March 13, 2020–December 31, 2021. While this tax credit can be a great benefit for employers, there have been third parties promoting improper ERC claims.

Employers should be wary of third parties advising them to claim the employee retention credit when they may not qualify. These third parties often charge hefty upfront fees or a fee contingent on the refund amount.

There are several conditions employers must meet to be eligible for an ERC. If you know of any improper ERC claims, submit Form 3949-A, Information Referral, to the IRS.

* This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.

Tip adapted from IRS.gov⁷

Footnotes and Sources

7. ^{IRS.gov, November 7, 2022}