Employee Retention Credit

To protect taxpayers from scams, IRS orders immediate stop to new Employee Retention Credit processing amid surge of questionable claims; concerns from tax pros

Aggressive marketing to ineligible applicants highlights unacceptable risk to businesses and the tax system 

IR-2023-169, Sept. 14, 2023

Moratorium on processing of new claims through year’s end will allow IRS to add more safeguards to prevent future abuse, protect businesses from predatory tactics; IRS working with Justice Department to pursue fraud fueled by aggressive marketing

WASHINGTON — Amid rising concerns about a flood of improper Employee Retention Credit claims, the Internal Revenue Service today announced an immediate moratorium through at least the end of the year on processing new claims for the pandemic-era relief program to protect honest small business owners from scams.

IRS Commissioner Danny Werfel ordered the immediate moratorium, beginning today, to run through at least Dec. 31 following growing concerns inside the tax agency, from tax professionals as well as media reports that a substantial share of new claims from the aging program are ineligible and increasingly putting businesses at financial risk by being pressured and scammed by aggressive promoters and marketing.

The IRS continues to work previously filed Employee Retention Credit (ERC) claims received prior to the moratorium but renewed a reminder that increased fraud concerns means processing times will be longer. On July 26, the agency announced it was increasingly shifting its focus to review these claims for compliance concerns, including intensifying audit work and criminal investigations on promoters and businesses filing dubious claims. The IRS announced today that hundreds of criminal cases are being worked, and thousands of ERC claims have been referred for audit.

The IRS emphasizes that… [Read full news release here]

Observation and Guidance: We know this problem has to be critical and significant for the IRS to take such a swift and drastic action to pause the program and scrutinize applications. What does this mean for you?

If you are preparing to apply for the ERC credit, you may have a long time to wait and the IRS will be adding layers of review and scrutiny before approving anything. If you already submitted your ERC tax credit request it may get delayed and for sure additional eyes with a lens for fraud and scam will be applied to the review. If you already received the credit, well I would be very concerned about pending audits and the repayments and penalties you might incur if the firm your worked with failed to actually justify and ensure your business is eligible for the credit to begin with.

Reach out to our firm today for guidance and to explore our ERTC Risk Assessment Solution to help analyze your specific situation. Don’t get caught unaware, take steps to protect your business.

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