When Daniel Werfel, the commissioner of the Internal Revenue Service, testified before a House committee early this year, he tried to explain how a pandemic-era program had become an expensive government boondoggle.Congress created the employee retention tax credit to support businesses and nonprofits that continued paying employees despite facing difficulty during the pandemic.But as time went on, and the public health crisis faded, more and more companies lined up to claim the government support, egged on by third-party companies that told them they could be eligible for millions, Mr.
Werfel said.“The further we got away from it, the more aggressive promoters and marketers started, in my opinion, taking advantage of honest small businesses and getting them to believe that they were eligible for a credit they truly weren’t eligible for,” Mr.Werfel told lawmakers in February.Seated behind Mr.
Werfel in the hearing room last February was Billy Long, whom President-elect Donald J.Trump would later name to lead the I.R.S.
Mr.Long, a former Republican congressman, was in Washington working with Lifetime Advisors, a company that had developed a booming business encouraging organizations to claim the credit.Mr.
Long joined Lifetime’s network of salespeople soon after leaving Congress in 2023, pitching businesses and nonprofits in his former Missouri district, including swimming pool and roofing contractors, on taking the credit.He regularly sported a hat that said, “Ask me about E.R.T.C.” — the initials for the credit — as he sought out business.Mr.
Long referred his clients to Lifetime, which would prepare an application for the tax credit and keep a slice of the money from the I.R.S.One contract viewed by The New York Times showed Lifetime collecting 20 percent of a roughly $300,000 tax credit, with half of the client’s fee due once Lifetime submitted the claim and the rest due upon receipt of the credit.We are having trouble retrieving the artic...