A class action lawsuit accuses tax services firm ERC Specialists of allegedly scamming small businesses seeking employee retention tax credits under the Covid era law known as the CARES Act.
The complaint alleges that ERC Specialists promised small businesses substantial tax credits and streamlined processes to determine their qualification. However, these businesses allegedly were often not eligible for the tax credit. The defendant allegedly submitted hundreds of claims on behalf of these businesses, knowing that the IRS would not approve them because of an overwhelming number of applications.
According to the complaint, the IRS later imposed a moratorium on new claims to protect honest small business owners from scams. According to the complaint, this led to potential criminal and civil penalties for those businesses involved, including claw back of the tax credit and an IRS audit.
The lawsuit accuses ERC of allegedly violating the Illinois Uniform Deceptive Trade Practices Act and the Illinois Consumer Fraud and Deceptive Business Practices Act.
The plaintiffs are represented by attorneys Bryan Paul Thompson and Robert W. Harrer, of Chicago Consumer Law Center P.C., and Seth McCormick, of the Great Lakes Consumer Law Firm, all of Chicago.