Employers throughout the U.S. have been receiving advertisements and direct solicitations from third parties offering attractive tax savings in the form of Employee Retention Credits (ERC). Oftentimes, these third parties improperly promise employers eligibility for the ERC, compute their alleged credit, and even file amended employment tax returns in exchange for large lump sum payments or payments contingent upon the amount of the ERC received.

The IRS is aware of these types of schemes and is encouraging employers to be careful with these offers that are "too good to be true." The IRS also reminds taxpayers that they are always responsible for the information reported in their tax returns, including the repayment of any improperly claimed ERCs along with penalties and interest.

Any tax-related illegal activities related to ERC claims can be reported to the IRS by submitting Form 3949-A, Information Referral. Fraud and IRS-related phishing attempts can also be reported at 1-800-366-4484.

Recipients of these advertisements and direct solicitations are encouraged to consult their tax advisor with respect to their eligibility for ERCs. More information on ERC and eligibility is available in a previous Holland & Knight alert, "Update for Employers: Recent Legislation Improves, Extends Employee Retention Credit," May 27, 2021.