STPS

How To Avoid Employee Retention Credit Scams

It is critical to protect your company from the damaging effects of employee retention credit scams, which can be both costly and disruptive. To do so, you must first understand how these scams work and what steps you can take to protect yourself. To avoid becoming a victim of ERC scams, it’s critical to understand how they target businesses and the methods they employ. Here are seven suggestions to keep you safe:

Be Cautious of Any Inquiry You Receive:

It’s important to exercise caution when someone requests your personal or financial information, particularly through email, text, or phone. The IRS typically initiates communication via regular mail (USPS). However, the agency may physically visit or call a residence or company for purposes such as collecting overdue tax bills, delinquent tax returns or employment tax payments, or conducting an audit.

Keep in mind that scammers posing as IRS agents may use aggressive and intimidating tactics that do not reflect how the IRS treats taxpayers. The IRS has explicitly stated, it does not communicate with taxpayers about tax debts or refunds via email, text messages, or social media.

Contact the IRS When in Doubt

Due to the possibility of scams, you may feel hesitant to respond to a genuine IRS notice you receive by mail. To confirm the notice is indeed from the IRS, and not a fraudulent source, you can easily contact the IRS. It’s recommended to do so before replying to any uncertain correspondence, even if it seems authentic. You can contact the IRS by phone at 800-829-1040.

Thoroughly Investigate Any Service You Use

It is easy to put your trust in a company that promises to help you secure the ERC. Certain legitimate businesses, on the other hand, may use deceptive tactics to increase their profits. With the rise of fraudulent ERC companies, it is critical to inquire about the length of time any prospective business has been in operation.

It is critical to confirm that the company will provide you with all necessary documentation demonstrating their process and findings. Furthermore, if an audit is conducted, the company should be able to provide you with evidence to back up their claims.

Learn the Basics of the ERC:

While tax law may not be your forte, it’s still valuable to learn the basics. This will provide you with a broad comprehension of how businesses qualify and which wages are eligible for claiming. Conducting research prior to collaborating with a third-party can help you identify red flags or incorrect figures. Ensure that you have access to all documentation provided by the service. IRS explanation of ERC.

Request Information on Audit Defense Services

It’s important to determine whether a company or tax specialist will provide assistance in the event of an audit. Reputable businesses and accountants can offer such help. You should ask the service provider about their approach and obtain written documentation. A deceitful company will be unable to ensure audit defense.

Request Clarification on Pay Structure

It’s crucial to comprehend how the third-party you engage with will receive compensation. Do they require payment upfront, or is it contingent on the claim being filed? Additionally, what payment method do they prefer? It’s advised to avoid sending money to a different third party via wire transfer.

Be cautious of paying upfront fees, and bear in mind that the service provider should never guarantee a refund before understanding your circumstances.

Report Scams to the IRS

You’ve likely encountered phishing scams in the form of fraudulent emails. Scammers use these tactics to coax you into clicking on a fake link or completing a form to extract your personal information.

You may report such emails directly to the IRS by sending an email to [email protected] or by calling them at 800-829-1040. IRS imposter scams can be reported to the Treasury Inspector General for Tax Administration by calling 800-366-4484.

To safeguard themselves against tax credit scams, businesses must adopt a simple yet effective approach: conduct thorough research before hiring any advisors, maintain the confidentiality of personal information, and avoid succumbing to promises of effortless money or speedy returns. The potential consequences of Employee Retention Credit Scams for businesses are severe, and therefore, it is essential to take necessary precautions.

Written by Mike Ritzema

Before founding Superior Trucking Payroll Service, Mike was the CFO of a trucking company with 80 trucks and a thriving brokerage. This experience gave him the perspective that a payroll solution has to make the lives of the office people better.  All the solutions he has designed are to benefit everyone.  Our company mission is to help trucking families and that includes the company owners, the drivers, and the office.

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