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COVID Tax Credits to Safeguard Government Funds Recovering Improperly Issued – IRS Initiative!

IRS Progress in Recouping Misused Employee Retention Credits: Voluntary Disclosure Program Yields $225 Million

Combating ERC Fraud: IRS Audits Over 12,000 Businesses, Assesses $572M in Improper Claims

The IRS has reported progress in its efforts to recoup funds distributed improperly under the Employee Retention Credit (ERC). Initially designed to aid businesses in retaining employees during pandemic-related shutdowns, the ERC quickly became susceptible to fraudulent activities due to its complex eligibility criteria. Scammers exploited this complexity by targeting small businesses, offering assistance in applying for the ERC for a fee, even if the businesses did not qualify for the credit.

In a recent voluntary disclosure program that concluded on March 22, the IRS received $225 million from over 500 taxpayers who voluntarily returned the credit they believed they had received in error. These taxpayers were allowed to keep 20% of the returned amount. Additionally, an ongoing initiative allowing small businesses to withdraw unprocessed claims has led to 1,800 businesses reclaiming $251 million worth of claims. The IRS has also undertaken audits of more than 12,000 businesses that filed over 22,000 improper claims, resulting in assessments totaling $572 million.

READ ALSO: $1 Billion In Unclaimed 2020 Tax Refunds: International Revenue Service Urges Americans To File Before May 17 Deadline!

IRS Commissioner Worries Over ERC Abuse: Danny Werfel Addresses Harm to Small Businesses Amidst Fraudulent Claims

IRS Commissioner Danny Werfel expressed deep concern over the widespread abuse of these claims, emphasizing the harm inflicted on small businesses. He stated that while encouraged by the progress made in their initiatives to assist misled businesses, challenges persist. Although the IRS ceased processing new claims in September, it anticipates resuming processing in the coming spring. Furthermore, the IRS Criminal Investigation unit is reviewing an additional $3 billion in claims for potential fraudulent activity.

READ ALSO: 1,025 New Jobs And $523M Investment Boost Through 11 Projects Economic Assistance

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