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IRS Orders Immediate Stop to New Employee Retention Credit Processing

September 15th, 2023 | BY Jessica Fleet | Consulting | Tax | Affordable Housing | Cannabis | Construction | Healthcare | Manufacturing | Small & Midsize Businesses
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Amid a surge of questionable claims and concern for taxpayer safety from Employee Retention Credit scams, the IRS announced a halt through at least the end of the year.

The Internal Revenue Service (IRS) announced on Thursday that it’s immediately stopping processing any new Employee Retention Credit (ERC) claims after receiving a flood of improper and questionable inquiries.   IRS Commissioner Danny Werfel ordered the immediate moratorium to run through at least Dec. 31, 2023, 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. When correctly claimed, the ERC is a refundable tax credit designed for businesses that continued paying employees during the COVID-19 pandemic if their business operations were fully or partially suspended due to a government order or they significantly declined gross receipts during the eligibility periods.  Thanks to aggressive promotions by “so-called ERC mills,” the IRS has received more claims this year for credit than ever before.  The IRS is developing new initiatives to help businesses that were victims of aggressive promoters. This includes a settlement program for repayments for those who received an improper ERC payment; more details will be available this fall. As part of the broader compliance effort, the IRS is working with the Justice Department to address fraud in the ERC program and promoters who have ignored the rules and pushed businesses to apply.

Employee Retention Credit Questions?

Maner Costerisan will continue to provide updates as further information is shared from the IRS. If you have questions about a pending ERC claim or could use some additional clarification, please get in touch with our ERC team at maner@manercpa.com.  Read the entire IRS announcement here.