IRS Dirty Dozen Part 1 – 2023 Campaign Kicks Off by Warning About ERC Schemes

Dirty Dozen ERC WarningFor over 20 years, the IRS has published the “Dirty Dozen,” an annual list of prevalent tax scams and potentially abusive tax avoidance arrangements that put taxpayers at risk of losing personal information, data, money, and more. The list aims to protect susceptible taxpayers by raising awareness about the various schemes used by fraudsters and con artists.

Over the next few weeks, HW&Co. will present the scams you need to know about to help prevent yourself from becoming a victim. Read about these scams and share them with friends and family. First, we’ll examine ERC scams.

1. ERC Scams

This year, Employee Retention Credits (ERC) scams kick off the IRS annual Dirty Dozen campaign. The ERC is a refundable tax credit given to businesses that paid employees even when they were shuttered due to the COVID-19 pandemic. It can also be claimed by businesses that had a significant loss in gross receipts during certain periods. However, schemers are using promotions to trick ineligible taxpayers into claiming the credits, jeopardizing their financial and personal data.

IRS Issues Repeated Warnings

The IRS has repeatedly cautioned against trusting promoters who have been advertising (often via the radio or internet) assistance with obtaining refunds involving ERCs. These schemes often include inaccurate information related to eligibility and credit calculations.

According to IRS Commissioner Danny Werfel, “Businesses should be wary of advertised schemes and direct solicitations promising tax savings that are too good to be true. They should listen to the advice of their trusted tax professional. Taxpayers should remember that they are always responsible for the information reported on their tax returns. Improperly claiming this credit could result in taxpayers having to repay the credit along with potential penalties and interest.”

The full IRS news release regarding the ERC schemes offers additional information and warnings. 

Read more about the other entries in IRS’s Dirty Dozen campaign:
IRS Dirty Dozen Part 2 – Phishing, Smishing, and Fake Assistance with Online Accounts
IRS Dirty Dozen Part 3 – False Fuel Tax Credit Claims, Fake Charities, and Deceitful Tax Preparers
IRS Dirty Dozen Part 4 – Advice on Social Media, Spearphishing, and OIC Mills
IRS Dirty Dozen Part 5 – Schemes Aimed at High-Income Tax Filers, Bogus Tax Avoidance Strategies, and Schemes With International Elements

Stay tuned over the coming weeks as we continue to profile the remaining entries to keep you apprised of how to avoid evolving tax schemes.

 For more information, please visit the IRS website or contact an HW&Co. Advisor today.