The IRS is pressing pause on processing new claims for the Employee Retention Tax Credit, also known as the ERTC or ERC, amid an influx of dubious ERTC submissions generating increased concern in the agency about fraudulent claims. 

Employee Retention Credit Claim Moratorium

On September 14, the Internal Revenue Service announced an “immediate moratorium” through at least the end of the year on processing new ERTC claims. 

“The IRS is increasingly alarmed about honest small business owners being scammed by unscrupulous actors, and we could no longer tolerate growing evidence of questionable claims pouring in,” IRS Commissioner Danny Werfel, who ordered the immediate action, said. 

He warned that aggressive promoters are “harming well-meaning businesses and delaying the payment of legitimate claims, which makes it harder to run the rest of the tax system. This harms all taxpayers, not just ERC applicants.”

The agency further noted that payouts for ERTC claims will continue during the moratorium period but at a “slower pace.” Stricter compliance reviews are now in place, and “existing ERC claims will go from a standard processing goal of 90 days to 180 days.”

Previously, the agency announced it was shifting its focus to reviewing Employee Retention Tax Credit claims for compliance concerns, and that increased scrutiny included more intense audit work and criminal investigations into promoters or businesses filing potentially “dubious claims.” 

That announcement was made in July, and the IRS also announced on September 14, 2023 that hundreds of criminal cases are now being performed. Plus, thousands of ERC claims have been referred for audit.

IRS Urges Businesses to Work With “Trusted Tax Professionals”

The agency needs time to review current claims for fraudulent applications, but there will still be several months to claim the Employee Retention Tax Credit for wages paid in 2020 and 2021 after the moratorium is over. The deadline for all quarters in 2020 is April 15, 2024, and for all 2021 quarters, it is April 15, 2025.

Werfel said the agency is looking to “add new protections and safeguards to stop bad claims from ever coming in.”

“In the meantime, businesses should seek out a trusted tax professional who actually understands the complex ERC rules,” he said. “…Businesses that receive ERC payments improperly face the daunting prospect of paying those back, so we urge the utmost caution. The moratorium will help protect taxpayers by adding a new safety net onto this program to focus on fraudulent claims and scammers taking advantage of honest taxpayers.”

The team at Dayes Law Firm has been focused on assisting clients with tax matters for many years. Our tax professionals have already helped clients receive over $25 million in funds for ERC tax credit claims, showing a proven record of success with legitimate claims. 

In addition, our team can help you if you find yourself audited by the IRS in regard to your Employee Retention Tax Credit claim. We offer a free consultation on any of your ERTC questions, including any concerns you may have regarding an audit. Not only that, but we will defend any businesses we work with on an ERTC application with any audits or if there is ever a request for an audit in the future.
The IRS’ increased scrutiny of dubious ERTC submissions does complicate the claims process, but Dayes Law Firm can work with this new development to help you and your business get the funds you deserve in due time. Please contact us for a free, no-obligation consultation today.