The Covid-19 pandemic has turned the world upside down. Lockdowns, travel restrictions, and mandatory work-from-home policies have caused widespread financial hardship. Governments around the world have implemented measures to assist businesses during these difficult times, and the US government is no exception. One such measure was the Employment Tax Credit. Unfortunately, scammers have taken advantage of this program, which has led the IRS to halt processing new tax credit claims.
What is the Employment Tax Credit (ERTC)?
The Employment Tax Credit is a financial incentive for businesses to keep their employees on payroll during the Covid-19 pandemic. It is part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, signed into law by President Trump on March 27, 2020. The ERTC is a refundable tax credit, which means that businesses can claim it even if they don’t owe any tax. The credit covers 50% of qualified wages paid to employees between March 13, 2020, and December 31, 2020, up to a maximum of $5,000 per employee.
Why has the IRS stopped processing ERTC claims?
The IRS has stopped processing ERTC claims due to rampant fraud. Scammers have set up fake websites, claiming to provide assistance with ERTC applications. They ask businesses for confidential information, such as tax identification numbers, Social Security numbers, and bank account details. Once they have this information, they can steal money from the business’s bank account or sell the information to other scammers. The IRS has issued multiple warnings about these scams, but many businesses have still fallen prey to them. As a result, the IRS has halted processing new ERTC claims until further notice.
How can you protect your business from ERTC scams?
The best way to protect your business from ERTC scams is to be cautious. Be wary of unsolicited emails or phone calls offering assistance with ERTC applications. Scammers often claim to be from the IRS, but legitimate IRS employees will never contact you out of the blue. They will always send a notice by mail. Also, be sure to check the legitimacy of any website claiming to provide ERTC assistance. Legitimate websites will always have an “.gov” domain. Finally, never share confidential information with anyone you don’t trust.
What do you do if you’ve already applied for the ERTC?
If you have already applied for the ERTC, it is unclear whether your claim will be processed. The IRS has not yet issued a statement on this matter. However, it is possible that the IRS will review all existing claims for signs of fraud before processing them. If you believe that your business has fallen victim to an ERTC scam, you should contact the IRS immediately.
The Employment Tax Credit was meant to provide much-needed assistance to businesses struggling during the Covid-19 pandemic. Unfortunately, scammers have taken advantage of this program, leading the IRS to halt processing new claims. If you have already applied for the ERTC, it’s unclear whether your claim will be processed. The best way to protect your business from ERTC scams is to be cautious and never share confidential information with anyone you don’t trust. If you believe that your business has fallen victim to an ERTC scam, contact the IRS immediately.