On September 14, 2023, IRS Commissioner, Danny Werfel, ordered an immediate moratorium on processing new Employee Retention Credit (ERC) claims. The moratorium is expected to last until at least December 31, 2023. The pause in the processing of new claims comes after significant concerns related to aggressive and predatory marketing efforts by so called “ERC Mills.” Depending on where you are in the ERC claim process, below are our recommendations on how to proceed.

To find out more, read the IRS News Release.

Existing ERC Claims

If you have already submitted an ERC claim, the IRS notes that they will continue to be processed but at a much slower speed. The IRS News Release states that the processing times could be up to 180 days and will be longer if selected for audit or further review.

New ERC Claims After Moratorium Issued

If you were planning or are in process of filing a new ERC claim, the IRS has temporarily halted the processing of new ERC claims. The IRS has not stated when they will start to process the claims again, but noted the pause would be at least through December 2023. The IRS News Release did not specifically advise taxpayers to not file new claims. Therefore, if you have a legitimate claim documented with your tax advisor, we are recommending continuing the ERC study due to the upcoming ERC application deadlines. We will keep you updated on IRS announcements that will be forthcoming this fall.

Improper ERC Claim Resolution

If you improperly claimed the ERC and the claim has not been processed by the IRS, the IRS is setting up a process where you will be able to request that the claim be withdrawn. If your claim has been processed by the IRS and you were not eligible, the IRS will be setting up a settlement program this fall for repayments for those who received an improper ERC payment.

ERC Claim Selected For Audit

The IRS has noted that there will be a significant increase in ERC audits going forward. If your credit is selected for audit, you should reach out to your trusted tax advisor when you receive the IRS communication. In addition, before the credit is selected for audit, if it was processed by an “ERC Mill” you should make sure that you have adequate support that you qualified for the ERC credit and that eligible wages were used to calculate the credit. If the credit was prepared by an “ERC Mill” reach out to us to help you determine if you are eligible.

If you have questions about any of this information, please reach out to our office at 703.385.8888 or info@tgccpa.com.