IRS Letters to Disallow Ineligible Covid-Era Tax Credit Claims

The IRS will send more than 20,000 letters starting this week to taxpayers that made employee retention credit claims they didn’t qualify for.

The ERC is a refundable tax credit that was created during the Covid-19 pandemic to help struggling companies keep employees on their payroll. But a wave of overstated and fraudulent claims quickly followed, and to address it, the IRS paused processing new claims and announced new efforts to combat fraud.

Employers that claimed the pandemic-era credit but either their business entity didn’t exist or didn’t have paid employees ...