IRS Pauses Processing New ERC Claims Until 2024

  • Tax strategies
  • 9/15/2023
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Key insights

  • The IRS announced a moratorium on processing new employee retention credit (ERC) claims through the end of the year to better assess fraudulent claims before issuing refunds.
  • Now more than ever, the IRS urges employers to consult a qualified tax professional to assist with eligibility and documentation of ERC claims.
  • The IRS warns this may delay payment of ERC related refunds to taxpayers.
  • The IRS will issue instructions on how to repay claims for which taxpayers no longer believe they are eligible.

Consult a qualified tax professional to assist with eligibility and documentation of ERC claims.

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Update: 10/24/2023
This article has been updated and can be found here.

The IRS is serious about cracking down on fraudulent ERC claims

The IRS issued multiple warnings, a generic legal advice memorandum, and the “dirty dozen” article warning taxpayers against aggressive schemes for claiming COVID-related relief with the employee retention credit program. On September 14, 2023, it announced a moratorium on processing new refund claims through the end of the year to get a better handle on fraudulent claims and to slow the process to identify claims that may be less than reputable.

What does this mean for taxpayers?

  1. The IRS will continue to process ERC refunds for previously submitted claims. Taxpayers can continue filing refund claims but should verify their claims are supported with eligibility documentation for either a decline in gross receipts or a partial shutdown.
  2. The IRS encourages and supports employers’ choice to use a qualified tax professional to file their claims.
  3. Employers can expect longer wait times of up to a year to receive their refund payments, and the IRS may request more documentation from an employer prior to processing the claim.
  4. The IRS urges employers who have already filed an ERC claim to consult a trusted tax advisor regarding eligibility requirements. The IRS will issue guidance how to return the money if an employer no longer believes it is eligible for the credit.

“The IRS is increasingly alarmed about honest small business owners being scammed by unscrupulous actors, and we could no longer tolerate growing evidence of questionable claims pouring in. The further we get from the pandemic, the further we see the good intentions of this important program abused.

The continued aggressive marketing of these schemes is harming well-meaning businesses and delaying the payment of legitimate claims, which makes it harder to run the rest of the tax system. This harms all taxpayers, not just ERC applicants.”

— IRS Commissioner Danny Werfel

How we can help

Contact your CLA tax professional if you are an employer considering whether you may be eligible for the employee retention credit. We can assist in determining eligibility and collecting appropriate documentation to support the claims.

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