Facing allegations of Employee Retention Credit (ERC) fraud presents substantial risks for businesses and their owners. IRS ERC tax audits and investigations can lead to civil or criminal penalties, and once the IRS opens an inquiry, submitting a voluntary disclosure or withdrawing the business’s ERC claim is no longer an option. In this article, New Jersey IRS tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group, explains what owners and executives need to know when the IRS targets their business for suspected ERC fraud.

Facing allegations of Employee Retention Credit (ERC) fraud presents substantial risks for business owners in New Jersey. Combating ERC fraud is a top priority for the Internal Revenue Service (IRS), and business owners accused of ERC fraud can face both civil and criminal penalties. As a result, for those accused of ERC fraud, presenting an effective defense needs to take precedence, and this starts with engaging an experienced New Jersey tax attorney to deal with the IRS.

Kraken, the well-known cryptocurrency exchange, has been ordered by a federal court to disclose customers’ personal information and transaction data to the Internal Revenue Service (IRS). The order comes after Kraken’s prolonged fight to thwart the IRS' “John Doe” summons and after several other cryptocurrency platforms have already been forced (or voluntarily chosen) to comply with similar requests.

Businesses that improperly claimed the Employee Retention Credit (ERC) are facing scrutiny from the Internal Revenue Service (IRS). To help businesses that unknowingly worked with fraudulent promoters and scam artists to submit improper ERC claims, the IRS has announced a process for withdrawing invalid claims before they trigger an audit or investigation. If you think your business may need to file for withdrawal, you should consult with a New Jersey tax lawyer promptly.  

Earlier this year, the IRS announced that it was devoting additional resources to scrutinizing businesses’ Employee Retention Credit (ERC) claims. On September 14, 2023, it went a step further, announcing that it would stop processing new ERC claims as it focuses on uncovering and prosecuting ERC fraud.