IRS Puts a Halt to ERC Applications for Now!

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The Internal Revenue Service (IRS) has taken action to address concerns about improper Employee Retention Credit (ERC) claims and to protect honest small business owners from scams. Here are the key points from the IRS announcement:

1. Immediate Moratorium: IRS Commissioner Danny Werfel has ordered an immediate moratorium, effective from the announcement date until at least December 31 of the same year, on processing new claims for the pandemic-era Employee Retention Credit program. This action is in response to rising concerns within the IRS, feedback from tax professionals, and reports in the media about a significant number of new claims that are ineligible.
2. Reason for Concern: The IRS has expressed concern that a substantial portion of the new claims for the Employee Retention Credit program are ineligible. Additionally, there have been reports of businesses being pressured and scammed by aggressive promoters and marketing tactics related to these claims.
3. Processing of Existing Claims: The IRS will continue processing previously filed Employee Retention Credit claims that were received before the moratorium was imposed. However, due to increased concerns about fraud, processing times for these claims may be longer.
4. Focus on Compliance: The IRS has shifted its focus to reviewing Employee Retention Credit claims for compliance concerns, including intensifying audit efforts and launching criminal investigations into promoters and businesses that file questionable claims.
5. Criminal Cases and Audits: The IRS has initiated hundreds of criminal cases related to improper Employee Retention Credit claims and has referred thousands of claims for audit.

The IRS's actions are aimed at preventing abuse of the Employee Retention Credit program, protecting businesses from predatory tactics, and safeguarding the tax system. During the moratorium, the IRS plans to implement additional safeguards to prevent future abuse of the program. The agency is also working with the Justice Department to address fraud issues arising from aggressive marketing related to the program.

If ever you’re feeling overburdened by your tax situation or you’d rather be doing something else with your time, just remember we’re here to help you with all of your tax preparation, resolution/representation needs.  Now and in the future. Don’t put off addressing your tax situation. Feel free to contact us or message us with any questions you may have in approaching your specific tax scenario.