IRS Making Progress In Recovering Improperly Distributed Employee Retention Credit

A sign outside the Internal Revenue Service building is seen, May 4, 2021, in Washington. The IRS says it’s making progress with initiatives to claw back money improperly distributed under the

The IRS has reported progress in its efforts to recover funds that were wrongly distributed under the Employee Retention Credit (ERC). The ERC was established to assist businesses in retaining employees during the pandemic-induced shutdowns. However, the program became a target for fraudulent activities due to its intricate eligibility criteria, which scammers exploited to defraud small businesses.

As part of its initiatives, the IRS disclosed that it received $225 million through a voluntary disclosure program that concluded on March 22. This program allowed small businesses that believed they had received the credit erroneously to return the funds and retain 20% of the amount. Over 500 taxpayers participated in this program, with an additional 800 submissions currently under review.