Employee Retention Credit program, which was meant to help businesses get through the pandemic but has been dogged by suspicions of fraud.
“We’re seeing clear indicators that the vast majority, at least 70 percent of the ERC claims currently awaiting processing, have red flags about their accuracy,” IRS Commissioner Danny Werfel said Thursday. “A lot of these claims simply aren’t valid.” Congress created the tax credit in March 2020 to help businesses that kept paying employees after being shut down early in the pandemic. Despite narrow guidelines for what businesses could qualify for the credit, applications for the program have surged across the last three years, and the IRS stopped processing new claims last September. The agency will continue that moratorium.has investigated 1 million claims worth about $86 billion.
Nearly 5,000 businesses have withdrawn their ERC claims — totaling $531 million — since the IRS launched a withdrawal processes last year. Investigators have also initiated 450 criminal cases related to potentially fraudulent charges worth nearly $7 billion. Thirty-six criminal investigations into claims have resulted in federal charges, Werfel said.
The program initially was meant to run until April 2025, but the IRS is consulting with Congress about ending the program early, Werfel said.
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