Businesses be warned, tax scams are on the rise

The Better Business Bureau warns businesses to be wary of scamming companies that guarantee qualification of the Employee Retention Credit

CENTRAL VALLEY – After a tax credit was offered to businesses throughout the Valley after the pandemic, scammers began to take advantage of the credit for their own profit.

On April 14, the Better Business Bureau (BBB) warned business owners that there has been an increase in scammers claiming tax credits that they are not actually eligible for. The Internal Revenue Service warns about scams revolving around the Employee Retention Credit (ERC), a tax credit for businesses that continued paying employees during the COVID-19 shutdowns or had a significant income decline during the eligibility period.

“Think twice about promises of huge refunds. Scammers use the same tactics for many different cons,” the BBB stated in their press release. “Tax credit schemes are no exception. Scammers count on an emotional response to a promise of fast, free cash before reason sets in. If it sounds too good to be true, it probably is.”

While most eligible employers have already claimed this credit, unscrupulous companies are advertising ERC services to draw in businesses that are not eligible for the credit. The scammers then try to get their hands on personal  information for identity theft. In some cases, they may charge people for dishonest services. The best line of defense according to the BBB is to get informed, this way employers are able to spot the scams before they fall for it.


The scams usually begin with an ad online or on the radio, and they claim the government still owes businesses an ERC, which they can claim on their taxes this year. The scammers also ask people to call a number or visit a website for more information. A quick chat with the customer service representative or looking at a website convinces victims of the scam that qualifying for the ERC is extremely easy.

If contacted, the company will tell people they qualify for the credit without knowing anything about the business or how they handled COVID-19 shutdowns. They then ask the employer to provide sensitive information, including Social Security numbers, employer identification number (EIN) and other details the scammer can use to commit identity theft. If employers hesitate to provide personal information, the scamming companies quickly assure they only want to help employers get the money their business is entitled to.

The company charges a service fee in other scam versions to help employers get the credit. Unfortunately, if employers accept their services and claim a credit they aren’t eligible for – even if done in good faith – they could face serious consequences, including paying back the credit with penalties and interest. Ultimately, the IRS will hold them responsible for any inaccurate information on their tax return, not the scammer.

The BBB warns employers to not believe marketing materials that guarantee qualification for a tax credit. Anyone who makes guarantees without knowing anything about a business is likely “up to no good,” according to the BBB.

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