On September 14, 2023, the Internal Revenue Service (“IRS”) announced an immediate moratorium on the processing of new claims for the Employee Retention Credit (“ERC”) as part of its continuing effort to combat dishonest ERC promoters. The moratorium is expected to extend through at least December 31, 2023. The IRS will however continue processing previously filed claims during the moratorium, though now at a slower pace.
This moratorium is intended to protect small business owners from being scammed by dishonest promotors. Enhanced compliance reviews by the IRS show a substantial share of new ERC claims are ineligible as a result of improper claims being pushed by dishonest promoters. The IRS has provided guidance regarding what this moratorium means for an employer considering filing or having filed an ERC claim:
- Not Yet Filed a Claim – If you have not yet filed an ERC claim, the IRS urges businesses first to talk to a trusted tax professional and take precautionary steps to independently verify your ERC eligibility before applying. Doing so will help avoid filing an improper ERC claim and facing financial penalties and, potentially, additional complications with the IRS.
- Existing Claim Already Filed – If you have a pending ERC claim that has not been properly vetted for ERC eligibility, the IRS recommends reviewing ERC guidelines with a trusted tax professional and checking the new IRS question and answer guide regarding your potential ERC eligibility. If you feel that your claim is not eligible and has not been processed or paid, you can withdraw the claim—even if it is under audit or awaiting audit.
- Already Received ERC Funds – If you have already received ERC funds that you now determine has been claimed and received in error, the IRS will be implementing a settlement program to allow for the repayment of such funds. Compliance with the settlement program will allow the business to avoid penalties and future compliance actions with the IRS.
As the IRS has continually stated, eligibility for ERC is a highly nuanced and detailed analysis, and using a dishonest promoter or contingency firm carries additional risk. Dvorak Law Group and its team of professionals have already assisted many employers in assessing and documenting their eligibility in making their ERC claims and stand ready to do the same for you, whether you are considering making a claim or have already filed one.