As has been well-documented by now, the IRS has been coping with fraudulent claims for the Employee Retention Credit (ERC), going so far as to announce a moratorium on processing claims last year. 

A month after that announcement, the IRS instituted a withdrawal process for claimants who may have been victimized by so-called “ERC mills.” A voluntary disclosure program for businesses that wanted to repay refunds received for erroneous claims was announced in December. The voluntary disclosure program's deadline is March 22.

As it works toward resolving the issues surrounding the ERC, the IRS has shared seven warning signs of an incorrect ERC claim, Accounting Today reported. The seven warning signs are the following:

• Too many quarters claimed;
• Government orders that don't qualify;
• Too many employees and wrong calculations;
• Business citing supply chain issues;
• Business claiming ERC for too much of a tax period;
• Business didn’t pay wages or didn’t exist during eligibility period; and
• Promoter says there’s nothing to lose.

The IRS has emphasized that the ERC is “a complex credit with precise requirements to help businesses during the pandemic.” The precise requirements, including eligibility and other information to provide general information about eligibility, claiming the credit, scams and more, are available on the IRS’s ERC FAQ page.