Employee Retention Credit Claims Update
The IRS has released notice that they will be suspending the processing of new claims for the Employee Retention Credit (ERC) for the remainder of 2023. The announcement comes ahead of their plans to ramp up enforcement action. In addition, the IRS will launch a settlement offer program to allow taxpayers to withdraw or repay improper claims.
The IRS will continue to process pending claims filed prior to the moratorium but at a slower pace which is the result of a more detailed and comprehensive review of each claim. Taxpayers may be requested for additional supporting information prior to processing the claim.
The primary cited reason for the pause is due to the increased number of questionable claims. IRS has determined a large portion of the recent claim filings are from aggressive promotors pushing businesses to file for ERC credits who may not be eligible. These promotors are also charging substantial fees for their service.
The IRS has indicated they will be providing additional information on the settlement offer program, this fall, and more information is to be released on how processing will resume on new claims in the coming months.
Also, in the announcement the IRS emphasized that the ERC is an incredibly complex credit with very specific eligibility requirements and urged businesses to consult with a trusted tax professional that understands the complex ERC rules and not a promotor or marketer seeking a contingency fee.
In the meantime, we will continue to work on ERC filings for those who meet the eligibility requirements and determine the best time to file as the IRS provides additional guidance. Extended processing delays are expected as new claims are filed with the IRS.
Please reach out to our team at Smith Schafer with any questions.