On Thursday, September 14th, the IRS announced that it is putting an immediate pause on processing new Employee Retention Credit (ERC) claims until at least December 31, 2023. The IRS will continue to work through ERC claims received prior to the pause, however they noted that the increase in fraud concerns will likely result in longer processing time.
The immediate pause follows several announcements that the IRS has made, warning taxpayers of third party companies fraudulently marketing and selling ERC claims.
“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,” Commissioner Werfel said in a release. “The enhanced compliance review of existing claims submitted before the moratorium is critical to protect against fraud but also to protect the businesses from facing penalties or interest payments stemming from bad claims pushed by promoters.”
The IRS is working on new initiatives in order to help businesses who found themselves victims of ERC tax credit scams. One of these initiatives includes a settlement program for repayments for those who received an improper ERC payment. Additionally, the IRS is working on a withdrawal option for businesses who have filed an ERC claim that has yet to be processed. More details for these initiatives will be available this fall.
In the announcement, the IRS left taxpayers with the following advice:
- For those currently awaiting an ERC claim – the IRS will continue to process claims but at a greatly reduced speed due to the complex nature of these filings.
- For those who haven’t filed a claim yet, consider reviewing the guidelines and waiting to file. The IRS encourages businesses to use trusted tax professionals for ERC guidance.
- Withdraw an existing claim for businesses that have already filed. Businesses should carefully review the program guidelines with a trusted tax professional. More details will be available this fall.
- Wait for the IRS ERC settlement program to be finalized. For businesses that have already received an ERC that they now believe is in error, the IRS will be providing additional details on the settlement program in the fall that will allow businesses to repay ERC claims.
The announcement notes that the pause is only temporary, so we should expect businesses that are still eligible to be able to claim the credit once more information is released.
Danielle L. McMahon is a Supervisor in the firm’s Tax Services Group. She practices in the areas of income tax return preparation, tax planning for individuals and businesses, payroll and sales tax return preparation and bookkeeping. Her clientele includes medical practices, real estate, retail, and individuals. She is a graduate of Le Moyne College Madden School of Busiess with a Master of Business Administration and Bachelor of Science in Accounting.
As a leading certified public accounting firm located in central New York, Grossman St. Amour CPAs PLLC has been in business for over 65 years. The firm provides businesses and individuals with accounting, audit, taxation, business formation and valuation, financial and retirement planning, fraud examination and deterrence, and peer review services. For more information about how Grossman St. Amour CPAs PLLC can be of service to you, contact our professionals at 315.424.1120 or [email protected].