In addition to moving more valid Employee Retention Credit (ERC) payments through the system, the Internal Revenue Service says it has stopped $5 billion invalid claims of the business tax credit. The Employee Retention Credit (ERC) saga continues, this time with some good news for businesses awaiting the benefits of the tax credit. The ERC was created in 2020 to help businesses and their staff stay afloat during the COVID-19 pandemic. But a rash of recent claims, many of them questionable filings encouraged by aggressive ERC promoters, created problems for the Internal Revenue Service and legitimate claimants. The IRS instituted... Read more →
Tax fraud
When the COVID-19 pandemic was at its worst in 2020 and 2021, Uncle Sam offered help to businesses who kept workers on payroll. But the Employee Retention Credit (ERC), like many tax benefits, was complicated. That's led to wrong claims, so the IRS is asking companies to review their claims, both filed or about to be submitted. The Internal Revenue Service says another major announcement about the Employee Retention Credit (ERC), the tax break created to help companies weather the COVID-19 pandemic’s economic challenges, is on the way. But until then, the agency is urging businesses to re-evaluate their filings.... Read more →
IRS urges social media users to give a thumbs down to bad online tax advice, like the non-existent Self Employment Tax Credit. How do you use social media? I get suggestions from neighbors for home repair services and local restaurants. I also check out cat videos. Way too many cat videos. I also interact with reputable tax pros I know, leading to innumerable interesting and informative online tax discussions. Again, this is with trained tax professionals, whom I’ve known online (and some in real life) for years. I do not, however, use social media to get tax tips from strangers... Read more →
Photo by Leeloo The First Tax scams tend to slow down after the main federal return filing season, but they never go entirely away. That’s still true as we head into the heart of summer 2024. The Internal Revenue Service is warning taxpayers there is a new scam involving the purchase of clean energy tax credits. This latest scheme, like so many, is based on a real tax break. Legal credit, but limited: The Inflation Reduction Act, which President Joe Biden signed into law on Aug. 16, 2022, contained provisions that dramatically changed federal clean energy tax credits. The law... Read more →
Unsplash+ in collaboration with Getty Images The Employee Retention Credit (ERC) was created to help businesses stay afloat and keep staff on the payroll during the height of the COVID-19 pandemic. Basically, this tax credit’s benefits — thousands of dollars per employee that eligible companies kept paying — were for the 2020 and 2021 tax years. It has turned into a major tax headache, for both businesses and the Internal Revenue Service. But, says the IRS, it has made progress on evaluating the plethora of claims filed after the pandemic’s peak. And it has some good news for small businesses... Read more →
No, not that guy. However, this month's federal tax trial in a North Texas courtroom does have a connection to Donald J. Trump and some interesting similarities to his falsification of business records trial just concluded in New York City state court. In the Texas trial, John Anthony Castro, who briefly sought nomination as the GOP’s 2024 presidential candidate and pestered the Party's presumptive nominee with lawsuits, was convicted on May 24 on 33 counts of federal tax fraud. Federal prosecutors said Castro’s scheme resulted in more than $15.5 million in tax losses to Uncle Sam. Global marketer of tax... Read more →
Shortly after MLB superstar Shohei Ohtani joined the Los Angeles Dodgers, a federal sports gambling scandal involving his now-former translator Ippei Mizuhara broke. This week, Mizuhara (below left), agreed to a plea deal. (Mizuhara photo by Moto "Club4AG" Miwa from USA - Angels vs Mariners 2019-6-8 Anaheim Stadium, CC BY 2.0. Ohtani photo by All-Pro Reels from District of Columbia, USA - Dodgers at Nationals, CC BY-SA 2.0.) Sports and courts too often coincide outside the usual tennis venues. Leagues are sued by competitors. Broadcasting rights battles are litigated. Players’ union grievances are heard by various judges. Individual players sometimes... Read more →
Unsplash+ in collaboration with Getty Images The smartest tax move often if hiring a good tax professional. Unfortunately, the tax community is not immune to bad actors. Every year, the Internal Revenue Service warns taxpayers to thoroughly vet the person they want to hire to handle their taxes. Every year, the IRS also issues warning about unscrupulous tax preparers who take advantage of trusting taxpayers and take their money. These alerts also are routinely part of the IRS annual Dirty Dozen scam list; dishonest tax pros is #6 on the 2023 list. (Preview: the 2024 list is on its way... Read more →
The Employee Retention Credit (ERC) helped many companies keep workers during the difficult COVID-19 pandemic days. But some ERC claims wrong, and the IRS is successfully recouping some of those incorrectly claimed and/or issued funds. The Internal Revenue Service closed out its Employee Retention Credit (ERC) Voluntary Disclosure Program (VDP) on Friday, March 22, on a high note. Going into the day, the VDP, which allowed those who got improper ERC payments to pay back most of the money, had produced more than $225 million from 500+ taxpayers. Another 800 submissions were still being processed, and even more being filed... Read more →
Ill-gotten gains used to fund a lavish lifestyle. For 10 years, a Rhode Island man ran a Ponzi scheme that ultimately left conned investors empty handed, while he used the funds to pay for his own lavish lifestyle. At the same time, Thomas Huling, 58, of West Warwick, also was ripping off the U.S. Treasury. On March 19, Huling was sentenced to eight years in federal prison for those crimes. The jail term comes 18 months after he pleaded guilty, back in September 2022, to wire fraud and tax evasion. Under the plea deal, the government agreed to the dismissal... Read more →
Are you having second thoughts about an ERC claim your company made? It so, it's time to review your records, and if you find you received an incorrect tax credit amount, let the IRS know by this Friday, March 22. (Photo by Henri Mathieu-Saint-Laurent) With the deadline to let the Internal Revenue Service know you got an improper Employee Retention Credit (ERC) fast approaching — it's this Friday, March 22 — business owners who are concerned need to act fast. Recipients of wrong payments can apply for the IRS' ERC Voluntary Disclosure Program by that deadline. If accepted, the businesses... Read more →
Did you discover you got an improper Employee Retention Credit (ERC) payment? You still have time to get out of the tax jam by applying for the ERC voluntary disclosure program. (Photo by Unsplash+ in collaboration with Getty Images) ERC voluntary disclosure deadline is March 22 Last December, the Internal Revenue Service announced that businesses that received improper Employee Retention Credit (ERC) amounts could let the agency know about the error. In these cases, many of which were created when companies got bad tax advice from aggressive ERC promoters, the companies would have to repay only 80 percent of the... Read more →
Crooks know you're anxiously awaiting your tax refund. That's why this filing season they're again impersonating Internal Revenue Service agents. The latest refund scam is an email or text about your tax refund or tax refund e-statement. In both cases, warns the Federal Trade Commission (FTC), the messages are efforts to steal your identity and money. As in previous incarnations, these latest fake IRS messages encourage recipients to click a link, supposedly to "check on your tax refund e-statement," or "fill out a form to get your refund." The FTC provided the image below of one of these fake IRS... Read more →
Tax laws are full of unintended consequences. That became painfully clear during the COVID-19 pandemic, when a variety of tax relief provisions were created to help individuals and businesses deal with the virus' economic effects. Such was the case with the Employee Retention Credit, or ERC. "The ERC provided a financial lifeline to millions of businesses and exempt organizations during the pandemic," said IRS Commissioner Danny Werfel in his prepared testimony for the Feb. 15 hearing before the House Ways and Means Committee. "The IRS has worked hard to implement this credit, and we have processed about 3.6 million ERC... Read more →
The Internal Revenue Service has made it clear for years. It wants to know about your digital assets. Ignore the crypto question, now at the top of more tax forms, at your own tax peril. And if you go further and don't report taxable digital transactions, the Department of Justice (DoJ) will get involved. That's the case for a Texas man, who this week was indicted on charges of filing false tax returns and structuring cash deposits to avoid currency transaction reporting requirements. Bitcoin was a component in both charges. Notably, the federal prosecution involving digital transactions is historic, at... Read more →
Only 80% of wrongly-claimed Employee Retention Credit amounts must be repaid. Photo by Anastasiia Chepinska on Unsplash We're all aware of the continuing medical issues from long COVID. The coronavirus' tax effects appear to be just as persistent. The Internal Revenue Service is still dealing with law changes enacted to provide pandemic relief. The Employee Retention Credit, or ERC, is one of them. This refundable business tax credit was designed for companies that continued paying employees during the COVID-19 pandemic despite financial hardship. To qualify, the businesses were either fully or partially suspended due to a government order, or had... Read more →
Photo by Grant Durr on Unsplash 🌟 Billions of dollars in fraud. 🌟 Victims across the globe. 🌟 🌟 Criminals who are all about personal gain. 🌟 No, that's not the opening voiceover in a trailer for a new Netflix true crime series, although I'd watch it if it were. It's from IRS Criminal Investigation Chief Jim Lee's comments on his unit's top 10 cases of 2023. Those three opening elements, said Lee, are the crux of CI's biggest busts last year. "When I say our team at CI is the best at following the money trail, I mean it,"... Read more →
More than 20,000 businesses are about to learn how serious the Internal Revenue Service is about stopping questionable Employee Retention Credit (ERC) claims. The tax agency has sent them a letter notifying them that they won't be getting the COVID-19 pandemic tax relief. Many of the claims were filed by ERC mills that have aggressively promoted the tax relief, often to businesses that did not qualify. The amount of such questionable claims prompted the IRS in September to stop processing all new claims. This first round of IRS letters to some of those who did file for the ERC is... Read more →
Unsplash+ in collaboration with Getty Images The Internal Revenue Service and its Security Summit partners today wrapped up the eighth annual National Tax Security Awareness Week with a warning for everyone, individual taxpayers and tax pros, to stay alert to emerging tax scams. It's a message the group issues regularly throughout the year because con artists work year-round to steal our money and, in many cases, our identities. Once they get that personal data, they can file fake tax returns to try to collect fraudulent refunds. By now, most of us are well aware of the warning signs of scams... Read more →
Photo by Anne Nygård on Unsplash Most taxpayers get federal tax refunds. Internal Revenue Service data complete through Oct. 27 shows that the agency received 160.5 million returns and issued nearly 105 million refunds that totaled more than $319 billion. Not surprisingly, taxpayers who are getting cash back from Uncle Sam are among the first to file every tax season. That's also a good security move. By getting their 1040 forms to the IRS early, they beat the criminals who might try to file fake returns under their names to claim their or even bigger fraudulent refunds. But some folks... Read more →