In August of 2023, the federal agency responsible for the nation’s cyber defenses, Cybersecurity and Infrastructure Security Agency (CISA), was forced to take two systems offline following a security breach. The point of sharing this is, if the CISA can be a victim of fraud, so can the average, or above average, human being. Especially in moments of chaos, where we are more likely to squelch that innate lie detector we all rely on to navigate through the manure of life. When the pandemic upended life as we know it, Scott Volner, owner of a small fertilizer business, went into overdrive to keep his employees on the payroll. That’s when the calls came in. “Tax service specialists,” claiming Volner qualified for a special IRS pandemic relief credit. For a small fee, they take care of the paperwork. Volner ended up with a check for $330,000 which he promptly put back into his business. But it turned out Volner wasn’t eligible for what’s known as the Employee Retention Tax Credit, or ERC. Now Volner must figure out how to pay back the money he used to save his business.
Volner is among tens of thousands of people caught up in the latest, and hopefully last, pandemic relief debacle. We can’t afford many more debacles. The Internal Revenue Service acknowledges that the ERC debacle is costing taxpayers hundreds of billions more than it should have. Congress said the ERC would cost around $55 billion, but new estimates put the cost at $250 billion. And claims are still pouring in. Estimated losses could reach $280 billion. Which is just enough to fund the FBI’s annual budget for 25 years. And yet, there aren’t enough FBI and other criminal investigators to catch even 1% of the fraudsters, experts say.
The immediate solution to stop the hemorrhaging was to stop processing ERC claims. Also, a massive launch to initiate audits has ensued along with focusing on “promoters” such as the one Volner was victimized by.
Shout out to Scott Volner and all the other victims who got lost navigating through the manure of this pandemic.
Today’s Fraud of The Day is based on article “Bogus ‘tax service specialists’ duped business owners in latest Covid relief debacle, IRS says” published by NBC News on April 16, 2024.
When the pandemic upended daily life in his small Missouri town, small-business owner Scott Volner went into overdrive to keep his employees on the payroll, despite a drop in revenue.
Then he started to get bombarded by telemarketers who were claiming to be “tax service specialists,” telling him he qualified for a special IRS pandemic relief credit. Among hundreds of calls and emails, he signed up with a company and agreed to pay a 10% fee. He ended up with a check for $330,000 — money he plowed back into his business.
