IRS Announces Increased Compliance Review Measures for Existing ERC Claims, Halt on Processing New ERC Claims Through 2023

IRS Announces Increased Compliance Review Measures for Existing ERC Claims, Halt on Processing New ERC Claims Through 2023

On Thursday, September 14, 2023, the Internal Revenue Service (IRS) announced that it is increasing compliance review measures for Employee Retention Credit (ERC) claims that have been filed to date, and it is immediately pausing the processing of any new ERC claims received through the end of 2023.

These moves from the IRS have been expected, due to its concerns over an influx of questionable ERC claims. Unfortunately, there are countless “ERC mills” that have been targeting small businesses across the country, deliberately misrepresenting the ERC eligibility requirements and charging businesses fees to file ERC claims for which businesses do not actually qualify. The increased review measures and moratorium on new claims are being put in place to help protect taxpayers against the financial risk associated with these scams.

What Does This Mean for Those Who Have Filed an ERC Claim?

If you have already submitted your ERC claim prior to September 14, 2023:

The IRS will still process and pay out for all eligible ERC claims that have already been filed prior to the announcement of the moratorium; however, the process will take longer, as claims will be more thoroughly reviewed. With stricter compliance reviews in place during this time, the standard processing time for an existing ERC claim will increase from 90 days to 180 days.

If you are currently working on an ERC claim that has not yet been filed:

The IRS will not be processing any new claims submitted through the end of 2023.

If your ERC claim was filed and you have questions on legitimacy:

You can contact Brown Plus. Additionally, please note that the IRS is developing a process for businesses who have found themselves victims of aggressive promoters. The IRS is also finalizing a special withdrawal option for those businesses, who have already filed an ERC claim that has not been processed. More details will be forthcoming from the IRS on these programs.

How Can Businesses Determine Their ERC Eligibility Moving Forward?

The IRS has recently released two new documents to help businesses determine their eligibility and navigate false information regarding the ERC:

  1. This document provides a checklist for determining ERC eligibility.
  2. This document outlines some red flags to watch out for when being contacted by questionable sources with claims regarding your ERC eligibility.

If you have further questions, please contact your BSSF Advisor.

Posted In: Tax | Insights

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