In an effort to protect taxpayers from scams and manage the surge of questionable claims, the IRS has put a hold on processing new Employee Retention Credit (ERC or ERTC) claims received through the end of 2023.
As a quick refresher, the ERC is a refundable payroll tax credit that originally arose from the CARES Act in 2020 to help small businesses keep employees during 2020 and 2021 through the coronavirus pandemic.
Beginning last summer, the IRS had already started issuing alerts and notices that they were subjecting the claims for the ERC to additional scrutiny to protect taxpayers, causing significant delays on the refunds. The large volume and complexity of claims has also impacted the agency’s decision to put additional safeguards in place.
According to the IRS website, the moratorium was ordered due to increased concerns from inside the agency as well as trusted tax professionals. The agency will continue to process ERC claims received before the hold was put in place…but there could be delays due to increased scrutiny against fraudulent claims. If you are working with a tax professional on a claim that is in process hasn’t been filed yet, be patient and wait for updates from the IRS.
For more information, please visit the IRS newsroom: https://www.irs.gov/newsroom/to-protect-taxpayers-from-scams-irs-orders-immediate-stop-to-new-employee-retention-credit-processing-amid-surge-of-questionable-claims-concerns-from-tax-pros
If you are considering pursuing the credit, please use caution, and have a reputable provider such as your CPA review your eligibility criteria carefully and thoroughly.
If you are looking for assistance applying for the ERC or would like a second opinion on your business’s eligibility for the credit, LMR may be able to assist.