Updates from the IRS Regarding Employee Retention Credit

On September 14th, the IRS issued a moratorium on processing new ERC claims through at least the end of 2023. Due to more aggressive tactics by promoters and false marketing, businesses have become more at risk of financial turmoil. The tax agency's greatest concern has been reports of new ERC claims being ineligible. 



Claims that were filed before the moratorium are subject to longer processing times due to the increased fraud concerns. At the beginning of the summer the IRS announced they will intensify auditing and criminal investigations. Since then, there are thousands of claims that have been referred for audit and hundreds of criminal cases in the works. 



According to IRS Commissioner Danny Werfel the moratorium and enhanced compliance review of existing claims will not only protect businesses from fraud, but also "penalties or interest payments stemming from bad claims pushed by promoters". 

Furthermore, the IRS announced a withdrawal process for ERC claims on October 19th. Essentially this new option will allow certain employers to withdraw their claim to avoid the possibility of getting a refund for which they are ineligible. This will also protect business from penalties and interest payments. Ultimately, claims that are withdrawn will be treated as if they were never filed. 



Taxpayers should review IRS guidelines for helping determine their eligibility for the Employee Retention Credit. Read more IRS news or review ERC guidelines by clicking the links below.