It’s hard to feel sorry for the Internal Revenue Service, but cleaning up for Congress is never fun. The Covid employee retention tax credit is turning into a classic case of government waste and fraud. Congress created the mess, leaving it to the IRS to mop up.
Pandemic transfer payments and student-loan forbearance ended this year, but the employee retention tax credit (ERC) is a Covid giveaway that keeps on giving. The government has paid $230 billion in claims, including about $120 billion this year. The taxpayer bill will keep growing since employers have until April 2025 to claim the credit on wages paid through 2021.
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