There Is A New Wave In Fraud Surrounding The Employee Retention Tax Credit: Stealing Checks

If a business owner payment has been stolen, businesses must act immediately says Brotman Law

SAN DIEGO, Sept. 21, 2023 /PRNewswire/ -- Just when it seemed the Employee Retention Tax Credit could not attract any more repercussions for businesses, a new method of fraud has emerged surrounding the checks themselves. Just last month, four individuals were formally charged with participation in a bank fraud scheme relating to the theft of business checks issued as part of the Employee Retention Tax Credit program.

While the USPS has been trying to stop the theft of these checks since early 2023, their efforts have not been able to stop criminals from stealing these payments in various ways. When an ERTC check is issued, it is printed by the Department of Treasury and distributed to taxpayers via the mail. Tampering with mail is a federal crime, but that has not dissuaded criminals from doing just that.

In the case of the aforementioned individuals formally charged, a stolen master mail key was used to obtain mail from postal boxes that contained checks, which were then altered to name different recipients and deposited into bank accounts of associates connected with the four ringleaders. In other cases, postal workers may be bribed by criminals to turn over checks into the wrong hands. In yet another iteration, identities and Employer Identification Numbers have been stolen or newly claimed, and the culprits have relied on relationships with mail carriers to obtain checks that were sent to addresses used to receive payments from unsuspecting victims.  

"The number of instances of fraud is not going down, it is only going up. What should be scaring business owners is the complicated nature of these schemes," says Sam Brotman, owner and managing attorney of Brotman Law. "We had a client just the other day that ended up in this very situation where their checks were stolen. Now, not only do they have to prove they did not receive their ERTC payments, but they also have to prove they did not commit fraud and confirm their identity. It is a snowball of damage that can get out of control very quickly."

The first indication that a business may have been a victim of stolen checks or fraud is receiving a letter from the IRS questioning their Employee Retention Tax Credit claim. Additionally, if a business has filed for the credit and not received their checks yet after quite some time, there may be cause for concern. The new IRS moratorium on Employee Retention Tax Credit filings announced September 14 indicates that processing times for existing claims will go up and may take 180 days, but a significant amount of time beyond that without receiving a check is a red flag.

"The second a business receives notice of a review of their claim, especially if they have not filed or if they have not received any checks yet, they need to contact a tax professional immediately," says Brotman. "Proving innocence in cases of fraud, and potentially other criminal charges, must be done quickly and precisely. Businesses should not be handling these inquiries on their own."

Any business owner that is concerned about protecting their identity can contact Brotman Law to assess if they are at risk. Brotman Law is a national tax law firm headquartered in San Diego, California. The firm has been successfully navigating audits with the IRS for over 10 years, finding ways to produce the best possible result for clients even in situations where matters are incredibly nuanced or difficult. Brotman Law is available to speak with any business owner, professional services provider or individual about their Employee Retention Tax Credit claim and can be reached on their website.   

Contact: 
Alanna Markey
Director of Marketing
Brotman Law
(619) 378-3138
[email protected] 

About Brotman Law

Brotman Law is an established team of law professionals that have been helping clients and their businesses navigate the intricacies of tax law for over 10 years. The firm has processed thousands of individual ERC claims representing over $125 million and the seasoned audit representation team has collectively been involved in more than a thousand audits. Brotman Law is dedicated to providing every client with exceptional legal services accompanied by a compassionate approach that is unheard of in the industry. Beyond just successes with the IRS and tax agencies, the Brotman Law team is singularly united by genuine empathy for all clients, a strong desire to help, and never-say-quit tenacity that propels the firm to the best possible results on their clients' behalf. For more information or to book a consultation with the Brotman Law team, visit SamBrotman.com or call (619) 378-3138.

SOURCE Brotman Law