Please note: As of 12:00 am PDT on April 9, 2024, we are no longer accepting applications for tax year 2020. Any completed applications (with supporting documentation) submitted on or after 12:00 am PDT on April 9, 2024, will be prepared and filed for tax year 2021 only. By continuing to utilize our service, you acknowledge and agree that SmartERC will not prepare nor file your Forms 941X for any quarter of tax year 2020.

ERC Scams: How to Protect Your Business from Fraud

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January 12, 2024

ERC Scams: What You Need to Know

I know that as a business owner, your enterprise is your lifeblood. The Employee Retention Credit (ERC) has been a lifeline for many businesses, especially in the wake of the COVID-19 pandemic.

However, this has also made the ERC credit a target for fraudsters. Having served as an IRS Auditor for over 13 years, I want to share my expertise with you to help you protect your business from these scams.

Dirty Dozen Warning from the IRS

The Internal Revenue Service (IRS) recently issued an alert warning taxpayers about the increase in fraudulent activities related to ERC claims

In my experience working for the IRS, I’ve seen firsthand the rise in fraudulent activities related to ERC claims. These fraudsters use a wide range of deceptive tactics, from phishing emails and fraudulent calls to fake websites — all designed to fool you into providing sensitive information or making false claims.

I’m here to help you recognize these tactics.

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4 Tips for Recognizing ERC Scam Tactics

By recognizing common scam tactics, you can stay alert and make informed decisions for your business. Here are four key tips to help you identify potential ERC scams and safeguard yourself against fraudulent activities:

  1. Phishing Emails: Scammers often send emails appearing to be from legitimate organizations, such as the IRS or your payroll provider. These emails typically request personal or financial information.
  2. Fake Websites: Fraudsters create websites that mimic official government sites or recognized tax preparers to trick individuals into providing personal information or payment for fake ERC services.
  3. Fraudulent Calls: Scammers use aggressive tactics during phone calls, demanding immediate payment or sensitive information.
  4. Stolen Marketing: Scammers often steal the marketing tactics of successful companies. Do your research. Check to see if established companies are using similar wording and design formats of the top ERC companies.


9 Ways to Avoid ERC Scams

My goal is to equip you with the knowledge and tools to recognize and avoid these scams. I’ll guide you through the common tactics and provide you with actionable tips to safeguard your business. Here are key ways to identify and avoid an ERC scam:

  1. Research the Company: Scrutinize any communication related to the ERC. Verify the identity of the individual or organization contacting you.
  2. Verify for Legitimacy: Remember, the IRS and authorized tax professionals will never ask for personal or financial information over the phone. Always verify any requests through a separate trusted channel, such as encrypted payroll and accounting software.
  3. Seek Expert Advice: I encourage you to consult with trusted professionals, such as our team of former IRS Auditors at Smart ERC, to understand whether you qualify.
  4. Stay Skeptical: Be wary of exaggerated promises. If it sounds too good to be true, it probably is.
  5. Understand the Terms: Read the terms and conditions of any ERC company before agreeing to anything.
  6. Check for Licensing: Ensure the company is properly licensed and accredited.
  7. Seek Recommendations: Check online reviews and ask for recommendations from reliable sources.
  8. Trust Your Gut: If something feels wrong, listen to your instincts and consider seeking assistance elsewhere.
  9. Stay Informed: Visit the IRS website to stay updated with the latest ERC guidelines and requirements.


How to Report ERC Scams

If you encounter an ERC scam or fall victim to one, report it immediately to government authorities. Your quick action is crucial to helping the IRS fight fraud. Here are the three resources you can contact:

  1. Internal Revenue Service (IRS): The IRS is responsible for overseeing tax-related matters, including ERC. You can report ERC scams to the IRS by calling their dedicated fraud hotline at 1-800-829-0433.
  2. Federal Trade Commission (FTC): The FTC handles consumer complaints and investigates fraudulent activities. You can report ERC scams to the FTC by visiting their website at or by calling their toll-free hotline at 1-877-FTC-HELP (1-877-382-4357).
  3. Your State Attorney General’s Office: Contact your State Attorney General’s office or consumer protection division to report ERC scams. They may have specific reporting channels or hotlines for reporting scams and fraudulent activities.


Avoid an ERC Scam by Partnering with Smart ERC

As we continue to rely on the Employee Retention Credit to help small businesses, it’s essential to be aware of the tactics used in ERC scams. By staying vigilant and informed, you can safeguard your business. 

Remember, protecting your business’s financial well-being is a responsibility we share, and I’m here to help shoulder that burden. At Smart ERC, we bring credentialed tax knowledge and IRS experience to the table. We are backed by Pinnacle Minds Inc., a tax and business consulting firm that has been helping companies navigate tax credits for over two decades.

Our team of former IRS Auditors specializes in payroll tax credits, and we’ve helped thousands of businesses across various industries claim the maximum ERC they’re entitled to. We’re here to help you navigate the complexities of the ERC with confidence.


Having served as an IRS Auditor for over 13 years, I have acquired a deep understanding of the tax-related challenges that business owners encounter. My primary goal is to ensure that we deliver accurate and dependable information. We aim to provide you with peace of mind as we expertly guide you through the entire process.”

– Alejandra Astudillo, Former IRS Auditor

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