IRS asks Congress to scrap employee retention credit amid 'gold rush' of bogus claims

The IRS is getting blasted with bogus claims for the employee retention tax credit (ERC) and is asking Congress for help.

IRS Commissioner Danny Werfel also said Thursday that the IRS had completed an internal review of the ERC claim process and will use information from the review to “deny billions of dollars of clearly improper claims.”

“The program turned into a gold rush for promoters,” Werfel told reporters Thursday, requesting that lawmakers close down the ERC program.

“Based on what we are seeing, we believe that closing the ERC program down to additional applicants would be the right thing to do,” Werfel said.

The program was given a moratorium last fall, but Werfel said the IRS is still getting around 17,000 claims per week.

Blame for the glut of fraudulent requests that are gunking up the agency was placed squarely by Werfel on advertisers and marketers of the credit, whose work promoting it “bombarded the airwaves” and resulted in a “gold rush” for their businesses, he said.

The employee retention tax credit has already been on the radar of lawmakers and is now being considered for cancellation in the Senate as a way to pay for other tax credits, including other business credits and an expansion of the child tax credit.

That swap of credits would total about $79 billion but has stalled in the Senate amid criticism from Republicans and Democrats.

All the bogus requests are preventing businesses with legitimate claims from getting them delivered by the IRS, Werfel noted.

Werfel plugged that legislation Thursday, saying the IRS wants Congress to enact “ERC-specific” provisions in the tax bill, put forward by top tax writers Sen. Ron Wyden (D-Ore.) and Rep. Jason Smith (R-Mo.).