{"id":2073728,"date":"2023-10-20T05:05:03","date_gmt":"2023-10-20T09:05:03","guid":{"rendered":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/irs-warns-taxpayers-of-penalties-over-questionable-pandemic-era-tax-credits\/"},"modified":"2023-10-20T05:12:04","modified_gmt":"2023-10-20T09:12:04","slug":"irs-warns-taxpayers-of-penalties-over-questionable-pandemic-era-tax-credits","status":"publish","type":"post","link":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/irs-warns-taxpayers-of-penalties-over-questionable-pandemic-era-tax-credits\/","title":{"rendered":"IRS alerts taxpayers about penalties for questionable pandemic-era tax credits."},"content":{"rendered":"<aside class=\"mashsb-container mashsb-main mashsb-stretched\"><div class=\"mashsb-box\"><div class=\"mashsb-count mash-medium\" style=\"&quot;\"><div class=\"counts mashsbcount\">20<\/div><span class=\"mashsb-sharetext\">SHARES<\/span><\/div><div class=\"mashsb-buttons\"><a class=\"mashicon-facebook mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/www.facebook.com\/sharer.php?u=https%3A%2F%2Fwww.conservativenewsdaily.net%2Fbreaking-news%2Firs-warns-taxpayers-of-penalties-over-questionable-pandemic-era-tax-credits%2F\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Facebook<\/span><\/a><a class=\"mashicon-twitter mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/twitter.com\/intent\/tweet?text=&amp;url=https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=2073728&amp;via=ConservNewsDly\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Twitter<\/span><\/a><a class=\"mashicon-subscribe mash-medium mash-nomargin mashsb-noshadow\" href=\"#\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Subscribe<\/span><\/a><div class=\"onoffswitch2 mash-medium mashsb-noshadow\" style=\"display:none\"><\/div><\/div>\n            <\/div>\n                <div style=\"clear:both\"><\/div><\/aside>\n            <!-- Share buttons by mashshare.net - Version: 4.0.47--><blockquote>\n<div data-post-content=\"true\" class=\"post_content\" id=\"post_content\">\n<p>The\u200b Internal Revenue \u2062Service (IRS) has issued a warning\u200c to taxpayers, \u2063signaling potential\u2062 penalties over dubious pandemic-era \u200dtax \u200bcredits that were aggressively pushed by unscrupulous marketers \u2064and led to a \u200dsurge of bad claims.<\/p>\n<p>The warning\u2014which includes a new \u2064option that could help taxpayers avoid penalties for improper claims\u2014relates to a flood of bad claims \u2062for the pandemic-era relief program known as the Employee \u2062Retention Credit \u200c(ERC). This is a refundable tax credit designed for\u2064 businesses that continued paying employees during COVID-19 shutdowns.<\/p>\n<div class=\"my-5\">\n<p>Because of a large number of improper ERC\u200d claims pushed by predatory promoters\u2064 on\u2062 unwitting businesses, the IRS <a href=\"https:\/\/www.irs.gov\/newsroom\/irs-announces-withdrawal-process-for-employee-retention-credit-claims-special-initiative-aimed-at-helping-businesses-concerned-about-an-ineligible-claim-amid-aggressive-marketing-scams\" target=\"_blank\" rel=\"noopener\">on Oct.\u200b 19<\/a> announced a\u200c special withdrawal process that allows businesses that \u200bfiled a questionable claim to withdraw\u200b it \u2063and avoid the risk\u200c of getting \u2063an illegal refund that could \u200dprove costly.<\/p>\n<\/div>\n<div class=\"shortcode\"><!--$--><\/p>\n<div class=\"border-comp-divider mb-4 mr-4 w-full max-w-[500px] border px-5 py-4 text-[16px] leading-[20px] text-[#262626] md:float-left\" id=\"in_article_related_stories\">\n<h2 class=\"mb-3 font-sans text-[16px] font-semibold uppercase leading-[19px] text-[#2F2F2F]\">Related Stories<\/h2>\n<div class=\"mb-4 flex gap-2\">\n<div class=\"grow\">\n<div class=\"mb-1 line-clamp-4 sm:line-clamp-3\">\n<a href=\"http:\/\/www.theepochtimes.com\/us\/irs-extends-deadline-to-nov-16-for-californians-to-file-taxes-5513009?ea_src=author_manual&#038;ea_med=related_stories\"><\/p>\n<h3 class=\"text-sm sm:text-base\">IRS Extends Deadline for Californians to File Taxes<\/h3>\n<p><\/a>\n<\/div>\n<div class=\"text-comp-caption text-[14px] leading-[18px]\">10\/18\/2023<\/div>\n<\/div>\n<div class=\"shrink-0 basis-[70px] sm:basis-[120px]\">\n<a href=\"http:\/\/www.theepochtimes.com\/us\/irs-extends-deadline-to-nov-16-for-californians-to-file-taxes-5513009?ea_src=author_manual&#038;ea_med=related_stories\"><picture><source type=\"image\/webp\" https:><\/source><source type=\"image\/*\" https:><\/source><\/picture><\/a>\n<\/div>\n<\/div>\n<div class=\"mb-4 flex gap-2\">\n<div class=\"grow\">\n<div class=\"mb-1 line-clamp-4 sm:line-clamp-3\">\n<a href=\"http:\/\/www.theepochtimes.com\/us\/irs-announces-free-tax-e-filing-service-for-2024-season-accused-of-assuming-tax-preparer-role-5512328?ea_src=author_manual&#038;ea_med=related_stories\"><\/p>\n<h3 class=\"text-sm sm:text-base\">IRS Accused of Assuming \u2018Tax Preparer\u2019 Role<\/h3>\n<p><\/a>\n<\/div>\n<div class=\"text-comp-caption text-[14px] leading-[18px]\">10\/18\/2023<\/div>\n<\/div>\n<div class=\"shrink-0 basis-[70px] sm:basis-[120px]\">\n<a href=\"http:\/\/www.theepochtimes.com\/us\/irs-announces-free-tax-e-filing-service-for-2024-season-accused-of-assuming-tax-preparer-role-5512328?ea_src=author_manual&#038;ea_med=related_stories\"><picture><source type=\"image\/webp\" https:><\/source><source type=\"image\/*\" https:><\/source><\/picture><\/a>\n<\/div>\n<\/div>\n<\/div>\n<p><!--\/$-->\n<\/div>\n<p>Anyone who improperly claims the ERC must \u200dpay it \u2062back, possibly with penalties and interest, with the IRS warning that a business or tax-exempt group could \u2064find itself in a much\u200c worse cash position \u2063if\u2062 it has to pay back an improperly claimed \u200ctax \u2064credit\u2063 than if they had \u2062never claimed it in the first place.<\/p>\n<p>&#8220;The \u2062aggressive marketing of \u2062these schemes has harmed well-meaning businesses \u200dand\u2062 organizations, and some are having second thoughts about their claims,&#8221; IRS Commissioner Danny\u200d Werfel said in a statement. &#8220;We want to give these taxpayers\u2063 a way out.&#8221;<\/p>\n<div class=\"my-5\">\n<p>The <a href=\"https:\/\/www.irs.gov\/newsroom\/help-for-businesses-steps-for-withdrawing-an-employee-retention-credit-claim\" target=\"_blank\" rel=\"noopener\">new option<\/a> lets\u200c employers &#8220;avoid future problems&#8221; by withdrawing pending \u2063ERC claims that they suspect \u2063they may have been tricked into improperly filing.<\/p>\n<\/div>\n<p>Claims that are withdrawn will be treated by \u2064the \u200dIRS as\u200c if they were never filed, and the agency won&#8217;t\u200d impose penalties or interest.<\/p>\n<p>Even \u2062if a taxpayer has received the ERC refund check but hasn&#8217;t yet cashed or deposited it, they can still\u200d withdraw their claim.<\/p>\n<div class=\"my-5\">\n<p>The credit, which is complex, is available to employers, not individual taxpayers.<\/p>\n<h2>&#8216;Staggering&#8217; Level of Misleading ERC\u2063 Marketing<\/h2>\n<p>Under \u2064the current law, businesses can typically continue \u2063to file claims for \u200bthe ERC tax credit until April 15, 2025.<\/p>\n<\/div>\n<p>Since the\u200c program was enacted,\u200b over \u20633.6 million claims\u2063 have come in, with ERC-related fraud \u2063becoming a \u2062growing issue over time.<\/p>\n<div class=\"my-5\">\n<p>The IRS <a href=\"https:\/\/www.irs.gov\/newsroom\/irs-commissioner-signals-new-phase-of-employee-retention-credit-work-with-backlog-eliminated-additional-procedures-will-be-put-in-place-to-deal-with-growing-fraud-risk\" target=\"_blank\" rel=\"noopener\">found \u200cout<\/a> \u200c over the \u2062summer \u200cthat the further out from the pandemic, the bigger the percentage of illegitimate ERC claims. This\u2063 is due to what IRS Commissioner Danny Werfel called \u200dan &#8220;onslaught&#8221; of misleading marketing from predatory promoters pushing businesses\u2062 to file dubious claims.<\/p>\n<\/div>\n<p>&#8220;The\u200b amount of \u200bmisleading marketing around this credit is staggering, and it is\u200b creating an array of\u2063 problems\u200d for tax professionals and the IRS while adding risk for businesses improperly claiming the credit,&#8221; Mr. \u200dWerfel said\u200b in a statement in July 2023, \u200dwhen the problem first came \u2063to\u200d light in a major way.<\/p>\n<p>&#8220;A terrible scenario is unfolding that hurts everyone involved\u2014except\u200d the promoters,&#8221; he said at the\u2063 time, warning businesses to \u2062be on guard.<\/p>\n<div class=\"my-5\">\n<p>Since then, the\u2064 problem has only gotten worse, forcing the IRS to <a href=\"https:\/\/www.irs.gov\/newsroom\/to-protect-taxpayers-from-scams-irs-orders-immediate-stop-to-new-employee-retention-credit-processing-amid-surge-of-questionable-claims-concerns-from-tax-pros\" target=\"_blank\" rel=\"noopener\">announce in mid-September<\/a> a moratorium on processing\u200c new ERC claims through\u2063 the end of the year and announcing stricter compliance reviews for claims received \u200dbefore the moratorium.<\/p>\n<\/div>\n<p>Faced\u2064 with the growing problem of fraudulent ERC claims, the IRS promised to help businesses caught up in the aggressive ERC\u2064 marketing dragnet by developing a \u200dnew repayment program for \u200dthose who received an improper ERC payment.<\/p>\n<p>While the settlement program has yet to \u200cbe \u200dfinalized, the IRS \u200bhas\u200d now rolled out the special withdrawal option that lets taxpayers who were misled by promoters avoid possible repayment issues.<\/p>\n<p>However, the IRS warned businesses that willfully filed fraudulent claims or conspired to do so that using the special withdrawal option won&#8217;t exempt \u200dthem from potential criminal investigation and \u2064prosecution.<\/p>\n<div class=\"my-5\">\n<p>Because of the \u2062complex nature\u200d of ERC credits, the IRS recommends businesses seek out a \u200c<a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/tax-season-2023-irs-warns-of-questionable-tax-preparers-ahead-of-tax-filing-deadline\/\" title=\"Tax Season 2023: IRS warns of questionable tax preparers ahead of tax filing deadline\">trusted tax professional<\/a> who understands the\u2062 complexity of the rules around the credits rather than a promoter\u200c or marketer &#8220;trying to get a hefty contingency fee while\u200b taking advantage of honest\u200d taxpayers.&#8221;<\/p>\n<h2>ERC Scam Warning\u200b Signs<\/h2>\n<p>When it announced \u200cthe\u200d ERC claim \u200cmoratorium \u200din\u2064 September, the IRS <a href=\"https:\/\/www.irs.gov\/coronavirus\/frequently-asked-questions-about-the-employee-retention-credit#scams\" target=\"_blank\" rel=\"noopener\">updated its guidelines<\/a> on the tax credit\u200c and with them, warning signs of ERC scams.<\/p>\n<\/div>\n<p>Scammers use\u200c a number \u2063of different tactics\u200d to \u200bmislead people who have\u200d no chance of meeting the ERC claim requirements.<\/p>\n<p>Warning signs of\u200b such \u2063tactics\u2063 include unsolicited calls, fake \u2064letters, and online ads,\u2064 offering quick eligibility checks and promising easy applications. These schemes often involve large upfront fees or a percentage\u2064 of the refund amount, putting businesses at risk\u200c of \u2064financial loss.<\/p>\n<p>Other warning signs include promoters refusing to\u2063 sign ERC filings, leaving taxpayers \u2064exposed, and omitting key \u2064details about eligibility requirements. Scammers also often fail to mention specific ERC limitations, such as eligibility criteria and the need to reduce wage deductions, leading to potential legal issues.<\/p>\n<p>Because \u200cof the complexity of ERC \u2062claims, the IRS advised businesses \u2062and individuals to be cautious and seek guidance from reliable sources.<\/p>\n<\/div>\n<\/blockquote>\n<p> <\/p>\n<h2> How\u200c has the surge in\u200b improper claims for \u2064the\u2063 ERC impacted businesses \u2064and what risks do they face as a result?<\/h2>\n<p><span>  The Employee Retention Credit (ERC) could \u200dface penalties, according to a warning issued by the Internal Revenue Service (IRS). The IRS has identified a surge in bad claims for this pandemic-era relief program, which was designed to provide\u200b refundable tax credits to businesses that continued paying employees during COVID-19 shutdowns.<\/p>\n<p>The warning comes as a result of unscrupulous marketers\u2062 aggressively pushing these credits and leading to an influx of improper claims. To address this issue, the IRS announced a \u2064special withdrawal process on October \u200d19th. This process allows businesses that filed a questionable claim to withdraw it and avoid the risk of receiving an illegal \u200drefund that could prove costly.<\/p>\n<p>The improper claims for the ERC have been predominantly driven by predatory promoters targeting\u2063 unsuspecting businesses. These promoters may have misled businesses into filing claims that they do not qualify for, potentially resulting in \u2063penalties. To rectify this situation,\u200b the IRS has provided an opportunity for businesses to correct their claims and \u2063avoid any negative \u200bconsequences.<\/p>\n<p>By participating in the special withdrawal process, businesses can review their claims and determine if they meet the eligibility requirements \u2063for the ERC. If a claim is found to be improper, businesses can\u2064 withdraw it without facing penalties. This \u2063proactive approach \u200baims\u2064 to protect businesses from potential financial\u2063 liabilities and mitigate the impact of unscrupulous marketing\u200d tactics.<\/p>\n<p>It is important for taxpayers to exercise caution and thoroughly understand the eligibility criteria for tax credits, especially those related to <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/rep-andy-biggs-calls-for-abolishing-the-department-of-education\/\" title=\"Rep. Andy Biggs Calls for Abolishing the Department of Education\">pandemic-era relief programs<\/a>. Seeking guidance from\u2062 reputable tax professionals can help ensure compliance with IRS regulations and prevent the risk of penalties or legal repercussions.<\/p>\n<p>In addition to addressing the surge in improper ERC claims, the IRS continues to work towards improving tax administration and providing support to taxpayers. This includes extending deadlines for filing taxes and <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/irs-warns-taxpayers-of-penalties-over-questionable-pandemic-era-tax-credits\/\" title=\"IRS alerts taxpayers about penalties for questionable pandemic-era tax credits.\">offering\u200b free tax e-filing services<\/a> for the upcoming season.<\/p>\n<p>As the pandemic continues to affect individuals and \u200cbusinesses, it is essential to stay informed about tax\u2064 regulations \u200band\u2063 credits. By remaining vigilant and aware of potential risks, taxpayers can navigate these challenging times while avoiding penalties and maximizing eligible tax \u2064benefits.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The IRS warns taxpayers of penalties for dubious pandemic tax credits promoted by unscrupulous marketers. The surge of bad claims has prompted the agency to offer a new option to avoid penalties.<\/p>\n","protected":false},"author":118,"featured_media":2073729,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","fifu_image_alt":"","footnotes":""},"categories":[543],"tags":[],"class_list":["post-2073728","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-the-epoch-times"],"fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","_links":{"self":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/2073728","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/users\/118"}],"replies":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/comments?post=2073728"}],"version-history":[{"count":0,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/2073728\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media\/2073729"}],"wp:attachment":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media?parent=2073728"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/categories?post=2073728"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/tags?post=2073728"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}