Misinformation about this tax credit is all over the radio, TV, social media and the internet. Scammers and aggressive marketers may lure your company with promises of easy money and a fast application process. Learn how to spot aggressive scam tactics.

By Better Business Bureau^® Serving Greater Cleveland

Business owners, beware! Con artists are trying to trick you into paying them to claim tax credits your business isn’t eligible for. Earlier this year, the Internal Revenue Service (IRS) put out a warning about Employee Retention Credit (ERC) scams. Now, the IRS has issued a moratorium through the end of 2023 on processing new ERC claims. This comes after a surge of questionable claims and concerns from industry professionals. The ERC is a refundable tax credit for businesses and tax-exempt organizations with employees who were affected during the COVID-19 pandemic and its resulting shutdowns. Most eligible employers have already claimed this credit, but that doesn’t stop many companies from claiming they can help you – for a fee of course. In actuality, the only way to claim the ERC is on a federal tax return and the requirements are different depending on the period for which you claim the credit.

Misinformation about this credit is all over the radio, TV, social media, and the internet. Scammers and aggressive marketers may lure your company with promises of easy money and a fast application process.

Start with Trust^SM: Review a company’s time in business, customer reviews, complaints and other information on BBB.org to determine if a company is legit.

Get references: A legitimate ERC credit specialist or consultant should be able to provide you with references, case studies, audit protection and work with experienced tax experts.

Avoid hidden fees: ERC credit specialists and consultants should be transparent with their fee structure. Avoid companies asking for large upfront fees and avoid tax companies that base their fee on the amount of your refund. Make sure you get the free structure in writing.  

Watch for quick fixes: While timeliness is important as the ERC deadline approaches, a company that claims they can determine your ERC eligibility within minutes is a Red Flag.

Avoid signs of aggressive ERC tax consultant marketing: Companies using aggressive marketing may be lying about eligibility, trying to steal taxpayers’ identities or taking a cut of an improperly claimed credit.

Aggressive marketing tactics include:

• Unsolicited ads, calls, emails or texts from someone you don’t know
• Upfront claims that you qualify for the credit before any discussion about your tax situation
• Promises of large refunds
• Claims you have nothing to lose. Companies could be audited and have to repay the credit, interest and/or penalties if they inappropriately file for the ERC credit.

Visit IRS.gov/erc for more information about eligibility and how to claim the ERC credit. Find more useful advice at the BBB Tax Tips & Resources page. You may also want to review the BBB Business Tip: Getting your business ready for tax season. For additional tips and resources, visit BBB.org to help keep your small business thriving. Contact your Better Business Bureau by calling 216.241.7678 or emailing info@cleveland.bbb.org. Interested in becoming BBB Accredited? Find out how you can apply for BBB Accreditation.