Frequently Asked Questions on How to Spot ERTC Scams

November 23, 2023
Dayes Law Firm

You may have heard that the IRS recently paused accepting new Employee Retention Tax Credit (ERTC/ERC) applications due to concerns about fraudulent claims being turned in to the federal agency. In mid-September, the IRS announced, “an immediate moratorium through at least the end of the year on processing new claims for the pandemic-era relief program to protect honest small business owners from scams.” 

As a business owner, how can you go about spotting ERTC scams as you’re seeking a business or promoter to partner with on claiming the tax credit? We’ve come up with a few questions you should ask as you’re considering different options in companies to work with. 

Spotting ERTC Scams FAQ 

1. Does the ERTC Company Follow the Government’s Requirements?

If a company offering ERTC services appears to suggest overlooking certain requirements involved in claiming the ERTC, you should definitely be wary. You don’t want to try to claim the ERTC under false circumstances and end up being audited later – or worse, end up contending with fees, penalties, or even potential criminal charges. 

2. How Do I Know if I’m Being Scammed?

The IRS itself has a guide to things you should look for to determine whether or not an ERTC promoter is trying to scam you. The agency says you should watch out for warning signs like “unsolicited calls or advertisements mentioning an ‘easy application process,’” as well as exorbitant upfront fees and “preparers refusing to sign the ERC return being filed by the business.” 

The IRS says you should also be concerned if the promoter claims you qualify for the Employee Retention Tax Credit before you ever discuss your tax situation. “The Employee Retention Credit is a complex credit that requires careful review before applying,” the agency notes. Any company offering to work with you on the ERTC should offer you at least a consultation first, which is exactly what our team of tax professionals here at Dayes Law Firm does for free. 

3. How Can I Protect Myself and My Business from ERTC Scams?

If you’re looking to apply for the ERTC but are worried about being scammed, there are ways for you to protect yourself and your business. The IRS recommends working with a trusted tax professional, for one thing, and says you should ask for detailed documentation explaining your ERTC eligibility and how the promoter ultimately calculates your anticipated ERTC amount. 

In general, you should avoid applying for the ERTC unless you are absolutely certain you are legitimately qualified to do so, and any reputable tax professional will go out of their way to reassure you of that. 

4. How Do I Report ERTC Fraud?

Let’s say you’re shopping around for a business or promoter to work with on the ERTC and you think you’ve concluded that a business is running an ERTC scam. How do you go about reporting potential ERTC fraud?

The IRS actually has a guide to help you report fraud if necessary. It involves completing an official form with supporting materials and information on where to send that information. To learn more, check out their ERTC fraud reporting steps here.

Working With a Reputable Team of Tax Professionals from Dayes Law Firm

The best way to avoid ERTC scams is to go with tax preparers and attorneys you know you can trust. At Dayes Law Firm, we have years of experience in the area of tax law and have already helped hundreds of business owners file for the Employee Retention Tax Credit, with those filings representing more than $100 million in tax credits.

We have the expertise and proven record of success to help you and your business with the ERTC. Our firm can offer a free, no-obligation consultation to discuss your unique circumstances and work with you on the ERTC application process from start to finish. Please contact us today to learn more!