September 18, 2023

IRS Stops Processing Employee Retention Tax Credit

On September 14, the U.S. Internal Revenue Service (IRS) issued a memorandum stating it has put an immediate stop to processing employers’ paperwork for the Employee Retention Credit (ERC), a key tax benefit that Congress approved during the COVID-19 pandemic to entice companies to keep employees on the payrolls.

The IRS did note that “payouts for these claims will continue during the moratorium period but at a slower pace due to the detailed compliance reviews. With the stricter compliance reviews in place during this period, existing ERC claims will go from a standard processing goal of 90 days to 180 days – and much longer if the claim faces further review or audit.” The IRS also said it may “seek additional documentation from the taxpayer to ensure it is a legitimate claim.”

The moratorium will last through the end of 2023, at least.

IRS Commissioner Danny Werfel ordered the moratorium in order to prevent future abuse and protect businesses from predatory tactics.

The agency is working with the U.S. Department of Justice to pursue fraud claims fueled by aggressive marketing for the ETC. Businesses are encouraged to review IRS guidance and tools for helping determine ERC eligibility, including frequently asked questions and a new question and answer guide to help them understand if they are actually eligible for the credit. Read more at the link above.

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