Key insights
- Proposed legislation to change the employee retention credit (ERC) deadline to file is stalled in the Senate.
- The IRS uncovered many improper claims during its moratorium.
- The IRS is prioritizing smaller, low-risk claims for employers.
Need assistance with an ERC claim? Check out our office hours.
The IRS recently updated taxpayers on its plans for processing employee retention credit (ERC) claims in the coming months.
In a news release, the IRS indicated it completed a detailed review of high-risk claims filed by aggressive marketers and plans to deny tens of thousands of inappropriate filings.
As a balance to this plan, the IRS recognized the importance of prioritizing and processing claims for small businesses with low-risk claims who are legitimately awaiting funds.
The completion of this review provided the IRS with new insight into risky employee retention credit activity and confirmed widespread concerns about a large number of improper claims," said IRS Commissioner Danny Werfel. "We will now use this information to deny billions of dollars in clearly improper claims and begin additional work to issue payments to help taxpayers without any red flags on their claims."
"This is one of the most complex credits the IRS has administered, and we continue to ask taxpayers for patience as we unravel this complex process," Werfel added. "Ultimately, this period will help us protect taxpayers against improper payouts that flooded the system and get checks to those truly eligible."
On September 14, 2023, the IRS initiated a moratorium on processing new claims so it could digitize and review queued claims — and seek input from Congress and others on an appropriate approach to the higher risk areas. IRS Commissioner Danny Werfel indicated they plan to keep the moratorium in place — even though claims are still coming in at an average rate of 17,000 a week.
Currently, more than 450 criminal investigations are underway for fraudulent claims, thousands of IRS audits are in process, and the IRS is contemplating civil and criminal action against promoters.
While there’s no action required of taxpayers at this time, those who have not received funds but believe their claims are improper may still withdraw their claims for refund.
The IRS is also considering reopening the Voluntary Disclosure Program for employers who believe they were improperly advised by a solicitor and would like to return their funds.
How we can help
CLA can help you understand the risk associated with your ERC claim and whether you have an opportunity to revisit your eligibility. We can answer your questions and help with filing, amending, and withdrawing claims.
We’ll host two office hours on Thursday, August 8 and Tuesday, August 13 at noon CT for an hour. RSVP here with your name, email, and any questions you have so we can send you a link to a Teams meeting.
We’ll answer the most common fact patterns using the statute, IRS notices, and guidelines available. If you need a more specific consultation, reach out to your CLA advisor.
Contact us
If you think you were misinformed and would like to return funds, reach out for guidance. Complete the form below to connect with CLA.
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