ATLANTA — The IRS Criminal Investigation Atlanta Field Office urges businesses to be wary of promoters stating they can help facilitate Employee Retention Credit claims.

The ERC, signed into law March 27, 2020, is a refundable tax credit for businesses who paid employees while shutdown due to the COVID-19 pandemic or had significant declines in gross receipts from March 13, 2020, to Dec. 31, 2021. The ERC was designed to encourage businesses to keep employees on their payroll.

As of May 31, IRS-CI has initiated 190 investigations involving more than $1.2 billion of potentially fraudulent employee retention credits in tax years 2020, 2021 and 2022. Thirteen of the 190 investigations have resulted in federal charges.

"Third parties are advertising on television, radio and online, claiming they can obtain money for businesses by submitting ERC claims," said Demetrius Hardeman, Acting Special Agent in Charge, IRS Criminal Investigation, Atlanta Field Office. "Unfortunately, in many instances, individuals are misled to fraudulently obtain ERC funds."

Businesses should be cautious of advertised schemes and direct solicitations promising tax savings that are too good to be true. Taxpayers are always responsible for the information reported on their tax returns. Improperly claiming an ERC could result in taxpayers being required to repay the credit with interest, as well as criminal penalties.

"Employers need to watch out for those promising big returns," Hardeman said. "Businesses can protect themselves by consulting with trusted tax advisors who can help them correctly file an ERC claim if they are eligible."

To report tax-related illegal activities relating to ERC claims, contact the Atlanta Field by email: atlantafieldoffice@ci.irs.gov. People can also use Form 3949, by visiting https://www.irs.gov/pub/irs-pdf/f3949a.pdf.

Alternatively, taxpayers and tax practitioners may send information to the IRS Whistleblower Office at the https://www.irs.gov/compliance/whistleblower-office for possible monetary reward.

Fraudulent ERC claims are one of the IRS's scams and schemes highlighted its 2023 Dirty Dozen list, which includes fake charities and unscrupulous tax preparers.