After issuing multiple warnings, the IRS has announced a moratorium on processing new Employee Retention Credit (ERC) refund claims through the end of the year. In combination with stepping up its audit and criminal investigation work regarding ERC claims, the IRS hopes the moratorium will slow down the ERC process to allow the organization to better identify which claims are legitimate.
While the ERC credit is real, scammers have been misrepresenting who can qualify for the credit, leading businesses to apply for a credit that does not apply to them. IRS commissioner Danny Werfel explains, “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.”
Although they will not accept any new claims for the remainder of the year, the IRS will continue to process refunds for any ERC claims that have been previously submitted. Employers can expect longer wait times – up to a year – to receive their refund payment. Additionally, the IRS may require additional documentation prior to processing the claim.
The IRS is encouraging employers who have already applied to consult with a tax professional to confirm that they qualify for the ERC refund. Additional guidance will be released offering next steps for any employers who have applied but no longer believe they are eligible for the credit.
If you have questions about the Employee Retention Credit or your eligibility, leave a comment below or feel free to contact me directly. I’m happy to help!