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In a timely turn of events, following our presentation on the Employee Retention Credit (ERC) on September 13, the IRS issued IR-2023-169 dated September 14, 2023 and has temporarily suspended processing all new Employee Retention Credit claims through December 31, 2023.
Why has the IRS paused processing new ERC claims? Because of the barrage of improper claims submitted and supported by aggressive promoters.
The IRS Commissioner, Daniel Werfel, said in a statement: “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. The further we get from the pandemic, the further we see the good intentions of this important program abused. The continued aggressive marketing of these schemes is harming well-meaning businesses and delaying the payment of legitimate claims, which makes it harder to run the rest of the tax system. This harms all taxpayers, not just ERC applicants.”
The IRS said that its criminal division had initiated 252 investigations through the end of July, which put more than $2.8 billion of potentially fraudulent ERC claims under scrutiny.
In addition to this moratorium, the IRS is also establishing a special withdrawal option for the 600,000 claims that have been filed but not yet processed. This option will be available for use by taxpayers whose claim hasn't yet been paid and will allow those taxpayers (many of which are small businesses who were misled by promoters) to avoid possible repayment issues and/or paying the promoter's contingency fees.
The IRS's advice to taxpayers during this time depends on where they are in the process:
The IRS and Delap agree, "businesses should seek out a trusted tax professional who actually understands the complex ERC rules, not a promoter or marketer hustling to get a hefty contingency fee. Businesses that receive ERC payments improperly face the daunting prospect of paying those back, so we urge the utmost caution. The moratorium will help protect taxpayers by adding a new safety net onto this program to focus on fraudulent claims and scammers taking advantage of honest taxpayers.”
Reach out to our experts Jill Tichenor at 971.327.4746 or Harriet Strothers at 971.327.4750 to help evaluate your situation and discuss your options. Give them a call at the phone numbers above or use the form below.