IRS Turns Down 20,000 Refund Claims for Covid Tax Credit

The Internal Revenue Service is rejecting more than 20,000 requests for pandemic-era tax refunds from employers that either didn’t exist or didn’t have employees during the required period, as the tax agency cracks down on a program that has been rife with problems. 

The move is the agency’s latest swipe at claims for the Employee Retention Credit, or ERC, a tax incentive created in 2020 to encourage business owners and nonprofits to keep workers attached to jobs during the pandemic. The credit has already cost the government at least $230 billion, roughly triple early estimates. A cottage industry of firms popped up to help employers claim the credit, often in exchange for hefty fees.