Wes Des Moines firm faces layoffs due to concerns over COVID-19 tax credits

Concerns about widespread fraud have prompted the Internal Revenue Service to announce the suspension of a tax refund program for businesses that kept employees on the payroll during COVID-19.
  • Innovation Refund in West Des Moines will lay off about 40% of its workforce after the IRS halted the tax credit program.
  • The program, which provides employers up to $26,000 per employee during the COVID-19 pandemic, is at the heart of Innovation Refunds’ business.
  • The IRS says it is responding to growing suspicions of program abuse and fraud by ‘unscrupulous actors’.

A West Des Moines firm confirmed Friday that it will lay off 78 employees by Oct. 19 after the U.S. Internal Revenue Service struck down a troubled tax credit program at the heart of the company’s business.

Innovation Refunds, 4350 Westtown Parkway in West Des Moines, reported the planned layoffs on the Iowa Workforce Development’s Worker Adjustment and Retraining Notification Act, or WARN, website. The law requires employers to give notice of mass layoffs at least 60 days in advance.

The layoffs coincide with the IRS’s announcement on Sept. 14 that it has paused processing new claims for the Employee Retention Credit program until at least the end of the year. The Innovation Refund helps employers use the credit to get a tax refund to keep workers on their payroll during the COVID-19 pandemic.

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