BISMARCK, ND (KXNET) — A local CPA firm is warning area businesses to watch for scammers looking to take your money.
Schmitz-Holmstrom CPA says crooks are targeting companies eligible for the federal government’s Employee Retention Credit, a program designed to help employers weather the COVID-19 pandemic by providing refunds of up to $10,000 per employee to help offset the cost of retaining workers in 2020 and part of 2021.
Scammers, pretending to be assistance firms, contact employers and offer to help apply for Employee Retention Credits and manage the process from application to distribution for either a fee, a percentage of the funds the employer will receive, or both.
Mike Schmitz, managing partner of Schmitz-Holmstrom CPA, says his firm has heard from numerous clients lately who have received such solicitations. He adds he has heard of some employers who bought into the offers and paid up to 10 times the amount legitimate assistance firms charge. In some cases, employers have lost up to $40,000.
Schmitz advises employers to use local firms to help apply for the retention credit and pay a fixed, hourly fee, not a percentage of the retention credits received.
In November 2022, the Internal Revenue Service issued a warning to companies to be wary of third-party services offering to apply for the Employee Retention Credit on their behalf, even if the company doesn’t qualify for the credit. Other scammers will file for credits greater than the number of actual employees at a business. The IRS warns any excess or improper payments are the responsibility of the company and not the “assistance firms” that file on behalf of the company.
In such cases, a company lose two times: The scammers take off with ERC money or large upfront filing fees and the company has to pay back excess or improper ERC payments that, in many cases, never arrive.
You can learn more about the frauds regarding the Employee Retention Credit here, here and here.