Fraud-Laden Pandemic Credit Causes Headaches for Buyers in Deals (1)

Diligence is often one of the longest—and most expensive—parts of merger and acquisitions work. On the buyer’s side, a team dives deep into their target’s financial past to unearth any risky activity.

These days, lawyers and accountants are discovering a new skeleton in targets’ closets: the employee retention credit.

Signed into law by former President Donald Trump as part of the CARES Act in 2020, the ERC is a refundable credit meant to encourage small businesses to keep their employees on payroll during Covid-19 lockdowns. But the IRS quickly faced a pileup of hundreds of thousands of unprocessed claims, as ...