The IRS Says The “Vast Majority” Of Pandemic Employee Retention Credit Claims Are Probably Scams

( – The US government enacted multiple programs to help Americans during the national health crisis. They were forced to implement the policies quickly to stop the financial hemorrhaging of the American people. That led to a significant amount of fraud.

On June 20, the IRS announced it was going to deny thousands of high-risk Employee Retention Credit claims. The agency explained it was processing more of the lower risk claims for eligible taxpayers. The government provided an Employee Retention Credit to businesses that were closed by stay-at-home orders in 2020 or the first three quarters of 2021. The credit was also offered if they had a reduction in gross receipts during that time or if they were a qualified recovery startup business.

According to the IRS announcement, about 10% to 20% of the claims belonged to the high-risk group. Those claims showed signs of “erroneous claims.” The federal agency estimated that “between 60% to 70% of the claims show an unacceptable level of risk” in addition to the claims in the highest risk group.

The IRS is processing payments that don’t appear to be improper. Officials expect some of those will be sent out this summer after a final review.

IRS Commissioner Danny Werfel said the review proved there was a large number of claims that were not proper. He explained that the agency would use the information it gathered to “deny billions of dollars in clearly improper claims” and work to send out the payments to taxpayers who didn’t have their claims flagged.

The commissioner asked taxpayers to be patient while the IRS continued the review process. He explained that it’s very complex and at the end of it, the agency hopes to know how to protect taxpayers from a flood of improper claims in the future.

Many of the programs implemented by the IRS during the national health crisis were hampered by fraud.

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