06.21.2024 Public Finance
New IRS Data on Fraud-Riddled Employee Retention Credit Underscores Dire Need for Congressional Action
WASHINGTON D.C. (Jun. 21, 2024) – Yesterday, after a review of 1 million backlogged Employee Retention Credit claims, the Internal Revenue Service (IRS) reported that the vast majority – as many as 90 percent – show markers of being fraudulent. In light of these findings, the IRS announced that it would extend the moratorium on processing credit claims and hinted at the need for Congressional intervention to fix the problem.
In response, Andrew Moylan, vice president of public finance at Arnold Ventures, issued this statement:
“New data released by the IRS is a vivid illustration of the disaster that is the Employee Retention Credit. What started as valuable tax relief to pandemic-impacted businesses has morphed into a feeding frenzy for fraud.
“This new information should serve as a stark reminder to Congress that every day it delays action on shutting down the Employee Retention Credit is another day for scam artists to defraud taxpayers and add to our staggering deficit. The House-passed Tax Relief for American Workers and Families Act would put a stop to the bleeding by ending the credit. Perhaps the astounding levels of fraud reported by the IRS can finally spur the Senate to action.”
From reforming unemployment insurance and low-income benefit programs to overhauling the Internal Revenue Service and improving tax administration, Arnold Ventures supports research and policy development efforts to improve program integrity and reduce waste, fraud, and abuse.
In January, Moylan wrote a piece in the Wall Street Journal urging Congress to move aggressively to shut down the disastrous pandemic-era Employee Retention Credit. He warned that its costs could skyrocket past $500 billion without Congressional action, with thousands of claims being paid out to ineligible or undeserving recipients.
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Arnold Ventures is a philanthropy that supports research to understand the root causes of America’s most persistent and pressing problems, as well as evidence-based solutions to address them. By focusing on systemic change, AV is working to improve the lives of American families, strengthen their communities, and promote their economic opportunity. Since Laura and John Arnold launched their foundation in 2008, the philanthropy has expanded, and Arnold Ventures’ focus areas include education, criminal justice, health, infrastructure, and public finance, advocating for bipartisan policy reforms that will lead to lasting, scalable change. As signatories of the Giving Pledge, the Arnolds have committed to giving away most of their wealth during their lives.
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