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A South Carolina-based “incentive consulting” firm is part of a sweeping federal investigation into alleged fraud related to Covid-19 tax credits, multiple sources with direct knowledge of the ongoing inquiry have confirmed to this media outlet.
This news will not come as a surprise to our audience as Synergi Partners – the entity tied to the inquiry – was the focus of a detailed investigative report prepared by our research director Jenn Wood last June.
In her report, Wood noted Synergi was facing “a number of federal lawsuits regarding its alleged mishandling” of tax incentives contained in the March 2020 Coronavirus Aid, Relief, and Economic Security Act, or “CARES Act.” Specifically, the company is alleged to have fraudulently processed applications for Employee Retention Tax Credit (ERTC) payments – which were intended to encourage small businesses to keep employees on staff rather than furloughing them or laying them off.
According to the civil lawsuits, Synergi erroneously advised entities that they qualified for these credits – and insisted on large up-front “contingency” payments based on this advice. As Wood noted in her report, such up-front fees are verboten in the industry “because they could be used to incentivize professionals to illegally bolster the filings of their clients.”
“Commissions and contingent fees are prohibited if the CPA is engaged in an audit or compilation and/or examination of financial information such as preparing an original or amended tax return or claim for a tax refund,” the American Institute of CPAs noted.
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Alleged fraud tied to ERTC is a nationwide problem. Last March, the Internal Revenue Service (IRS) issued a warning about ERTC fraud as part of its annual ‘Dirty Dozen‘ list of tax scams. The warning was issued “following blatant attempts by promoters to con ineligible people to claim the credit.”
A recent appeal published by a regional law firm claimed numerous tax credit advisors “scammed small businesses” as part of a “multi-billion dollar ‘industry’ of sophisticated con artists.”
“Lawsuits related to these issues have begun across the country, highlighting the severity of the situation,” the appeal noted.
Now, according to multiple sources familiar with the situation, Synergi is part of a criminal investigation related to the alleged scam – an investigation focused on “the processing (of) unsubstantiated tax credits” as well as a shady nationwide network of “referral” providers.
How serious is the rumored criminal probe?
“Synergi Partners is going down,” one source familiar with the inquiry said bluntly.
Another source made it clear Synergi wasn’t the only company facing potential criminal exposure related to alleged ERTC scams.
“This is a coordinated, cross-country investigation,” the source added. “A lot of individuals and institutions are under scrutiny for alleged ERTC fraud.”
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Founded in 2019 by Jim Brown and Tim Norwood – both purported pillars of the Florence community – Synergi still boasts of its expertise in the tax credit arena, describing itself as a “trusted partner” which researches “each piece of tax credit legislation to understand the qualifications for the credit opportunity in-depth.”
“There are many companies that offer tax credit and incentive consulting services – there are very few that are 100 percent focused on it,” the company claimed on its website. “Synergi’s proprietary methodology is consistent, proven, and defendable.”
Not so, according to the entities suing the company…
They have accused Synergi of asserting dubious ERTC eligibility – and then demanding payment for this allegedly erroneous advice up front. Allegations linked to improper payments to referral providers are also at the heart of the ongoing federal investigation, sources familiar with it confirmed.
Once again, if you believe you know of fraud related to ERTC – or any fraud related to tax credits – mail or fax a completed Form 14242 (and any supporting materials) to the IRS Lead Development Center in the Office of Promoter Investigations:
Internal Revenue Service Lead Development Center
Stop MS5040
24000 Avila Road
Laguna Niguel, California 92677-3405
Fax: 877-477-9135
Meanwhile, the IRS is offering companies which erroneously claimed ERTC credits during the 2021 tax year to pay back the money as part of a “voluntary disclosure program.” The deadline to submit applications related to this program is November 22, 2024.
Count on this media outlet to keep our audience in the loop as we are able to gather more information regarding the size and scope of this ongoing criminal inquiry…
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ABOUT THE AUTHOR …
Will Folks is the owner and founding editor of FITSNews. Prior to founding his own news outlet, he served as press secretary to the governor of South Carolina, bass guitarist in an alternative rock band and bouncer at a Columbia, S.C. dive bar. He lives in the Midlands region of the state with his wife and eight children.
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