Beware of Employee Retention Credit scams; Payers may receive notices CP2100 and 2100A if they filed an information return with errors
Internal Revenue Service (IRS) sent this bulletin at 06/22/2023 09:31 AM EDT
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Beware of Employee Retention Credit scams The IRS continues to see third parties aggressively promoting Employee Retention Credit (ERC) schemes. In News Release IR-2023-105, the IRS renewed an alert for businesses and tax exempt groups to watch out for warning signs of aggressive Employee Retention Credit marketing. These promoters may lie about eligibility requirements. In addition, taxpayers using these companies could be at risk of someone using the credit as a ploy to steal their identity or take a cut of the taxpayer’s improperly claimed credit. ERC is important pandemic-era credit and valuable if claimed properly, but could result in repayment and substantial penalties and interest if not. The IRS has trained auditors examining ERC claims posing the greatest risk. The IRS Criminal Investigation division is working to identify fraud and promoters of fraudulent claims. Illegitimate claims slow down processing of the credit for everyone. The IRS also reminds businesses, tax-exempt groups, and others about simple steps to take to protect themselves from making an improper ERC.
Reporting ERC fraud: Employers can report illegal tax-related ERC claims and activities by submitting a completed Form 14242, Report Suspected Abusive Tax Promotions or Preparers (PDF), and any supporting materials to the IRS Lead Development Center in the Office of Promoter Investigations. The fax telephone number and mailing address are on the form. Payers may receive notices CP2100 and 2100A if they filed an information return with errors When banks, credit unions, businesses and other payers file information returns with data that doesn’t match IRS records, the IRS sends them a CP2100 or CP2100A notice. The notices tell payers that the information returns they submitted have a missing or incorrect Taxpayer Identification Number (TIN), name or both. These notices are sent twice a year in September and October and again in April. Each notice has a list of payees with the issues. Payers need to compare the accounts on the notice with their account records and correct or update their records, if necessary. Payees may also need to correct their backup withholding on payments made to payees. The IRS sends notices for errors most frequently found on these forms:
Payments subject to backup withholding CP2100 and CP2100A notices also tell payers that they may be required to backup withhold tax payments. When payments are reported on the Form 1099 series and Form W-2G information returns, payments may be subject to backup withholding if:
Payers are responsible for any amount they fail to backup withhold and the penalties that may apply. More information can be found in Tax Tip 2023-75 on IRS.gov and in Publication 1281, Backup Withholding on Missing and Incorrect Name/TINs (PDF). If you have a technical or procedural question relating to government entities, please visit IRS.gov/fslg. For employment tax and account related questions, call the Business and Specialty Tax Line at 800-829-4933. For guidance on the technical aspects for filing information returns through the Filing Information Return Electronically (FIRE) System call Technical Services Operation at 866-455-7438. |
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