IRS Publication 5792 – In an era where financial incentives like tax credits can significantly benefit eligible entities, scammers are increasingly targeting small businesses and tax-exempt organizations with deceptive schemes. The IRS has issued Publication 5792 to highlight these risks, particularly surrounding the Employee Retention Credit (ERC). This guide aims to educate owners and leaders on recognizing and avoiding fraudulent promotions that promise easy money but deliver hefty penalties. By understanding the warnings in this publication, you can protect your organization from financial and legal pitfalls.
What Is IRS Publication 5792?
Released in April 2023, IRS Publication 5792, titled “Small Businesses & Tax-Exempt Organizations: Beware of Tax Credit Scams!”, serves as a critical alert from the Internal Revenue Service. Its primary goal is to warn against unscrupulous promoters who exploit misinformation about tax credits, especially the ERC introduced during the COVID-19 pandemic. The document emphasizes that while the ERC is a legitimate refundable tax credit for qualified employers, improper claims can lead to repayment obligations, penalties, interest, and even identity theft risks.
This publication is available directly from the IRS website and is designed for easy reference, outlining scam tactics and providing actionable advice. It’s particularly relevant in 2026, as the IRS continues to process and audit ERC claims from prior years, with scams evolving through digital channels like social media and email.
The Employee Retention Credit (ERC): A Legitimate Benefit Under Scrutiny
The ERC was established to support businesses and tax-exempt organizations that retained employees during the economic disruptions caused by COVID-19. Eligible entities could claim up to $26,000 per employee for qualified wages paid between March 12, 2020, and January 1, 2022. To qualify, organizations must have experienced either:
- A full or partial suspension of operations due to government orders related to COVID-19.
- A significant decline in gross receipts during specified quarters.
However, the complexity of eligibility has made the ERC a prime target for fraud. The IRS has noted a surge in improper claims, often fueled by aggressive promoters who charge contingency fees based on refund amounts. As of 2026, the agency is actively auditing suspicious filings and has included ERC scams in its annual “Dirty Dozen” list of top tax frauds.
| Key ERC Eligibility Criteria | Details |
|---|---|
| Time Period | Applies to wages paid after March 12, 2020, and before January 1, 2022. |
| Business Impact | Shutdown due to pandemic or required decline in gross receipts (e.g., 50% drop in 2020 quarters). |
| Claim Method | Must be filed on a federal tax return; no “easy application” outside this process. |
| Maximum Credit | Up to $26,000 per employee across 2020 and 2021. |
For the latest updates, visit IRS.gov/ERC to verify eligibility before filing.
Common Tactics Used by Tax Credit Scammers
Scammers employ sophisticated methods to lure victims, often through unsolicited ads on radio, TV, social media, emails, or phone calls. They promise “fast money” via a simplified process, claiming expertise in navigating IRS rules. In reality, these promoters:
- Fabricate eligibility by misinterpreting pandemic impacts.
- Demand large upfront or percentage-based fees tied to the anticipated refund.
- Use stolen personal or business information for further identity theft.
Publication 5792 stresses that these tactics leave victims facing IRS audits, where improper claims must be repaid with added penalties. Recent reports indicate that “ERC mills” – pop-up firms specializing in these claims – have processed billions in fraudulent refunds, prompting the IRS to halt new ERC processing in late 2023 and intensify investigations.
Red Flags: Signs of a Potential Scam
Recognizing warning signs is crucial to avoiding these traps. According to IRS Publication 5792, be cautious if a promoter:
- Guarantees large refunds without reviewing your financial records.
- Advertises an “easy” or expedited application outside of standard tax filing.
- Charges fees contingent on the refund size.
- Pressures you with urgent calls or emails claiming limited-time opportunities.
Additional red flags from the IRS’s broader scam alerts include unsolicited contacts pretending to be from the IRS or requests for sensitive information via phishing emails. Small businesses are particularly vulnerable, as scammers target their limited resources and desire for quick financial relief.
How to Protect Your Business or Organization from Tax Credit Scams?
Prevention starts with diligence. The IRS recommends the following steps:
- Verify Eligibility Independently: Use official IRS resources like IRS.gov/ERC to assess qualifications before engaging any third party.
- Choose Reputable Help: If assistance is needed, select a trusted tax professional. Tips for finding one are available on the IRS website.
- Report Suspicious Activity: If you encounter a scam, report it via IRS.gov or the Treasury Inspector General for Tax Administration.
- File Properly: Always claim credits through amended federal tax returns; avoid any “alternative” processes.
- Stay Informed: Monitor the IRS’s “Dirty Dozen” list and updates on emerging scams, as tactics evolve with new tax laws.
For tax-exempt organizations, additional vigilance is needed, as scammers may falsely claim credits like fuel tax or research credits, which have strict criteria.
Conclusion: Stay Vigilant for Long-Term Financial Health
IRS Publication 5792 underscores a simple truth: If a tax credit offer sounds too good to be true, it probably is. By heeding these warnings, small businesses and tax-exempt organizations can leverage legitimate benefits like the ERC without falling prey to scams. In 2026, with ongoing IRS enforcement, prioritizing compliance over quick gains is more important than ever. Consult official sources, seek professional advice, and report fraud to safeguard your operations. For the full text of Publication 5792, download it directly from the IRS website.