September 15, 2023

IRS Puts Employee Retention Credits on Hold

IRS Puts Employee Retention Credits on Hold Employee Retention Tax Credit

In response to the perceived abuse of the program and the avalanche of potentially improper claims, the IRS announced that it will stop processing Employee Retention Credit claims at least through December 31, 2023.

The Service said it has received approximately 3.6 million claims and that 600,000 of those remain unprocessed. The IRS Criminal Investigation division started 252 investigations involving more than $2.8 billion of claimed credits by the end of July.

What does this mean for you?

Withdrawal Option

The notice indicates that there will be a special withdrawal option made available for the filed but unprocessed claims. This program is designed to help businesses avoid possible repayment issues and promoter contingency fees. It will not necessarily exempt those who willfully filed false claims from any potential criminal investigation or prosecution.

Settlement Program

The IRS is also developing a settlement program for businesses that already received a credit they may not be entitled to. Repayment details will be made available in the fall. The program is expected to contain provisions to avoid penalties and other compliance actions. It is not clear yet what provisions will be available to handle promoter fees paid with the ERC payment.

Slow Processing

The Notice indicates that the IRS will continue to process some claims during the moratorium period but much more slowly – with processing taking 180 days or longer. This is due to the enhanced scrutiny now being applied to each claim. Businesses can expect requests for additional documentation, especially if the claim appears to be improper.

As always, your Marcum LLP advisor stands ready to help you navigate the ever-changing currents at the IRS.