IRS says it will deny most claims of pandemic tax credit for employers

By Hannah Ziegler, The Washington PostA sign for the Internal Revenue Service building in Washington, May 4, 2021. Employee Retention Credit program, which was meant to help businesses get through the pandemic but has been dogged by suspicions of fraud.

The tax credit only applied to certain businesses, including those that saw a steep decline in revenue or those that were fully or partially shut down by government orders, such as restaurants and theaters. But the tax credit program has been the target of aggressive marketing tactics, with robocallers and TV ads promising businesses they could receive $26,000 in tax credits for each employee retained.

Unwanted and fraudulent claims have clogged the IRS’s processing system and extended the wait for small businesses with legitimate claims, Werfel said. Even after setting the moratorium, the IRS has continued to see more than 17,000 claims per week, he added.

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IRS says it will deny most claims of pandemic tax credit for employersTax officials see “red flags” in at least 70 percent of claims for the Employee Retention Credit program, IRS Commissioner Danny Werfel said.
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