To protect taxpayers from scams, the IRS ordered an immediate stop of the processing of Employee Retention Tax Credit (ERTC or ERC) claims on September 14, 2023. This moratorium of processing new claims will supposedly allow the IRS to implement more safeguards to prevent future abuse and protect business from predatory tactics. The moratorium is set to run to at least December 31 following an increase in concerns by the agency after elevated reports of ineligible claims.
It is noteworthy that payouts will continue throughout the moratorium albeit at a slower pace. Due to the stronger compliance reviews in place during this time, the standard processing goal of 90 days will increase to 180, with a longer timeline in the event the claim needs further review or audit.
In announcing the moratorium, IRS Commissioner Danny Werfel offered the following explanation: “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.”
It is important for businesses looking to claim the ERTC to be weary of entities soliciting or pressuring them into using their services. It is always recommended that businesses use a trusted tax professional, who is well versed in the rules and nuances of the ERTC, when filing for the credit.
Improper ERTC claims open businesses to the overwhelming task of repaying funds, and the moratorium aims to allow the IRS to add a new safety net that focuses on fraudulent claims and scammers taking advantage of the program. Additionally, the IRS announced it will be developing new initiatives to assist businesses who have found themselves victim to ERTC scams. This will include a settlement program for repayments for individuals who improperly received ERTC funds, and details are expected to be announced this fall.
The IRS has not resumed processing and has no timetable for them to resume. The IRS released the following statement on January 1st, 2024:
“Following concerns about aggressive ERC marketing from tax professionals and others, the IRS announced Sept. 14 a moratorium on processing new ERC claims. During the next four months, the IRS plans to continue steps on fraud protection measures, which are necessary before the IRS anticipates resuming processing of claims submitted after the Sept. 14 moratorium. A specific resumption date has not been determined.”
The IRS commissioner additionally made comments in mid January of 2024 confirming that there was no timetable for processing claims received after 9/14/2023. The commissioner also said claims filed before this date were taking longer to review due to so many illegitimate claims.
For any questions relative to this new announcement or general ERTC information you can reach out to [email protected] or visit the IRS’ ERTC website here.
