Small Business Owners Must Repay IRS for Tax Credit Fraud

Scott Volner, a small business owner in Missouri, faced a double blow during the pandemic. After struggling to keep his fertilizer business afloat, he fell victim to a fraudulent scheme that promised government relief funds.

According to an NBC News report, Volner was contacted by telemarketers claiming he qualified for the Employee Retention Tax Credit, a government program aimed at helping businesses affected by the pandemic. Despite his initial skepticism, a company called ERC Specialists convinced him that he was eligible and filed paperwork on his behalf in exchange for a percentage of the funds.

Volner ended up receiving $330,000 from the government, which he reinvested in his struggling business. However, it was later revealed that he did not actually qualify for the program, leaving him on the hook to repay the entire amount.

This case is just one example of the widespread fraud that has plagued the Employee Retention Tax Credit program, with the IRS estimating $2.8 billion in fraudulent claims. While scammers bear the brunt of the blame, critics have also pointed fingers at the government for failing to clearly communicate program guidelines and enforce accountability.

Business owners like Volner are now urged to exercise caution when seeking government assistance, as the prevalence of scams underscores the importance of due diligence. While legitimate programs exist to support struggling businesses, it is essential for entrepreneurs to verify their eligibility and avoid falling prey to fraudulent schemes.