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IRS Warns Of Employee Retention Credit Fraud If you are running a business, it is likely you have heard of the Employee Retention Credit (ERC). The ERC is a refundable tax credit for businesses and tax-exempt organizations that had employees during the COVID-19 pandemic and were affected by the pandemic itself. The requirements are different depending on the time period for which you claim the credit. If you do qualify, this could be a good opportunity to offset some of the effects of these last two To learn more about the ERC, visit crop years. https://www.irs.gov/coronavirus/ You can still apply employee-retention-credit#beware. for the ERC assuming your business qualifies. You must file before March 31, 2024, so you have some time to determine if your business qualifies. We encourage you to visit with your tax professional to determine if your business qualifies for the credit. Keep a couple of things in mind as you navigate this process. The IRS has announced that they have suspended processing ERC claims until the end of the year due to a high volume of fraudulent claims. This indicates fraudulent claims are currently an issue for the IRS. Obviously, they are reviewing the applications very closely. If you are going to apply for ERC, be
sure you have your paperwork filled out correctly. We highly encourage you to have your application reviewed by your tax professional before filing. You don’t want to apply for money you are not qualified to receive. Anyone who incorrectly claims the credit will have to pay it back and may owe penalties and interest, so there is at least that risk involved. Keep in mind, the only way to claim the credit is on a federal employment tax return which makes this sensitive information. One item the IRS has recently pointed to as the cause of the fraudulent claims is aggressive ERC marketing. To learn more about the ERC (including answers to your ERC questions), go to https://www.irs.gov/coronavirus/employee-retention-cred it#beware. This page also highlights some of the warning signs of aggressive ERC marketing. Every situation is different, so be sure you qualify before applying for the credit. Again, your tax professional should be able to determine that for you. The ERC may be a great opportunity for your business, but as with any government program, you want to be sure you get the details right when you put your application together. Texas Cotton Ginners Association provided this article.
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