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May 26, 2024

Small Business Owners Have to Pay Back The IRS for Tax Credit Scam

Small Business Owners Have to Pay Back The IRS for Tax Credit Scam

Published: Apr 26, 2024
by Annie Pilon
In Small Business News

Like many business owners, Scott Volner struggled during the pandemic. Volner, who runs a fertilizer business in a small town in Missouri, was ultimately able to keep his company afloat. However, his business then faced an even greater challenge – fraud.

Over the past few years, according to an NBC News report, Volner said he received countless calls from telemarketers touting a government relief program called the Employee Retention Tax Credit. At first, he didn’t believe he qualified for these funds, but a company called ERC Specialists told him that if his business faced pandemic-related disruptions, he qualified. This company then filed paperwork with the IRS in exchange for 10 percent of the proceeds.

Volner received $330,000 from the federal government, which he poured back into his business. Unfortunately, Volner never actually qualified for the program in the first place. So he must now pay back what he received, even though he already invested that money back into his business.

Unfortunately, this isn’t an isolated incident. The IRS estimates there’s been about $2.8 billion in fraud related to this program. And the internet is inundated with companies and individuals looking to “help” businesses receive these funds.

Of course, the scammers who are looking to take advantage of small business owners bear most of the blame for these issues. But the IRS and federal government have also faced criticism for failing to clearly communicate the parameters of the program and struggling to hold guilty parties accountable.

There are plenty of federal programs that provide legitimate funding and other resources to business owners to help them through struggles. And businesses that qualify for the ERC can certainly benefit as well. However, it’s ultimately on business owners and their teams to ensure that they qualify and that they’re dedicating resources to programs that are worth their time and energy. It may not be fair, but the high number of scams related to this one program should have businesses on high alert for similar issues.

Image: Envato

Annie Pilon is a Senior Staff Writer for Small Business Trends and has been a member of the team for 12 years. Annie covers feature stories, community news and in-depth, expert-based guides. She has a bachelor’s degree from Columbia College Chicago in Journalism and Marketing Communications.

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