The IRS continues to focus on combating perceived fraudulent claims relating to the COVID-19 pandemic-era Employee Retention Credits (ERCs). On Oct. 19, the IRS announced a special process allowing taxpayers to withdraw certain previously filed ERC claims. That announcement follows enhanced IRS scrutiny of potentially fraudulent ERC claims that resulted in the IRS suspending processing new ERC claims at least through the end of 2023. It is expected that the IRS will continue its focus on this front and issue additional guidance in an effort to combat such perceived fraud. The uncertainty concerning ERC claims is highlighted in the context of M&A transactions, especially if the parties are otherwise generally relying on representation and warranty insurance (RWI) rather than an indemnity from the sellers.
The ERC is a refundable payroll tax credit that was originally created by the CARES Act in 2020 for the benefit of certain businesses that continued paying qualified wages during the COVID-19 pandemic between March 13, 2020, and Sept. 30, 2021 (or Dec. 31, 2021, in the case of certain startup businesses, which are beyond the scope of this alert). The refundable credit is payable to qualifying taxpayers in cash. Generally speaking, a business is eligible for ERCs with respect to qualified wages if its business operations were fully or partially suspended by order of a governmental authority due to COVID-19, or if it had a...
A $193 million award against Eli Lilly and Co. in a False Claims Act suit alleging Medicaid fraud will stand, the Seventh Circuit ruled Thursday. The US Court of Appeals for the Seventh Circuit re...