What is the Influence of the IRS Moratorium on ERTC Claims?

As part of the CARES Act, the Employee Retention Tax Credit (ERTC or ERC) is an important tax credit that has provided financial relief for many businesses that kept paying employee wages during the COVID pandemic. 

However, because of a high volume of fraudulent claims, the IRS has announced an ERTC moratorium until the end of 2023. This will create a significant processing delay for new and existing claims. 

Who Is Eligible for the ERTC?

Businesses may be eligible for the Employee Retention Tax Credit (ERTC) if:

• They had to suspend their operations partially or fully in response to government mandates related to the COVID-19 pandemic.
• Their gross receipts significantly declined during the eligible period (50% for 2020 and 20% for 2021).

These basic guidelines involve many nuances. For instance, owner wages and other types of wages may not count toward the credit. That’s why it’s vital to consult a reputable tax professional before claiming the ERTC. 

Why the IRS Decided on a Claims Processing ERTC Moratorium

Unfortunately, some illicit agencies seek to exploit the ERTC initiative. These dishonest companies employ aggressive marketing tactics to urge small and medium-sized business owners to file for the benefit without proper compliance measures and charge hefty fees for their “counseling services.”

Many business owners fell prey to these ERTC scams, attempting to claim the tax benefit without understanding that they violated IRS guidelines. Such applications often met with outright denial or, if the IRS scrutinized the claims after already paying benefits, a demand for repayment of improper claims. 

To protect honest business owners from fraud and reduce the burden on the tax system, which is straining to process and check a deluge of questionable claims, the IRS issued an ERTC moratorium effective at least until the end of 2023. The moratorium will allow the IRS time to examine pending claims. 

How the IRS Will Process Claims Under the Moratorium

So, how can the moratorium affect you as a business owner?

• If you filed for the ERTC and the IRS received your claim before September 14, 2023, standard processing time will extend from 90 to 180 days. Processing could take longer if the claim needs additional supporting documentation.
• If you’re filing a new claim, it will go into a queue for review in 2024. Once the moratorium ends, the IRS will resume processing claims on a first-come, first-served basis.

The IRS will also invest extra resources to screen all ERTC claims and uncover illegitimate claims. Businesses that filed for tax benefits without meeting requirements could face an IRS audit and even a criminal investigation.

Moreover, since businesses file for the ERTC via an amended Form 941-X, there may be processing delays for all such amended forms, even those that don’t include an ERC claim. 

How Business Owners Can Avoid IRS Complications

The regulations surrounding the ERTC benefit are often tricky to understand. To prevent tax issues, you should:

• Review the guidelines and consult a reputable tax professional before filing a new claim
• Revise submitted claims for compliance and, if necessary, withdraw claims that don’t meet eligibility criteria
• Follow IRS guidelines on repaying benefits already received through an erroneous ERC claim

Questions About the ERTC? Contact Dayes Law Firm

Are you wondering whether your business qualifies for the Employee Retention Tax Credit? Contact us at Dayes Law Firm. Our trusted tax lawyers have helped many businesses claim the ERTC while avoiding compliance concerns. We’ll let you know whether you meet ERC eligibility requirements and how the current ERTC moratorium may influence your claim’s processing. 

Give us a call at (800) 503-2000 or fill out our online form to schedule your free consultation today.

As part of the CARES Act, the Employee Retention Tax Credit (ERTC or ERC) is an important tax credit that has provided financial relief for many businesses that kept paying employee wages during the COVID pandemic. 

However, because of a high volume of fraudulent claims, the IRS has announced an ERTC moratorium until the end of 2023. This will create a significant processing delay for new and existing claims. 

Who Is Eligible for the ERTC?

Businesses may be eligible for the Employee Retention Tax Credit (ERTC) if:

• They had to suspend their operations partially or fully in response to government mandates related to the COVID-19 pandemic.
• Their gross receipts significantly declined during the eligible period (50% for 2020 and 20% for 2021).

These basic guidelines involve many nuances. For instance, owner wages and other types of wages may not count toward the credit. That’s why it’s vital to consult a reputable tax professional before claiming the ERTC. 

Why the IRS Decided on a Claims Processing ERTC Moratorium

Unfortunately, some illicit agencies seek to exploit the ERTC initiative. These dishonest companies employ aggressive marketing tactics to urge small and medium-sized business owners to file for the benefit without proper compliance measures and charge hefty fees for their “counseling services.”

Many business owners fell prey to these ERTC scams, attempting to claim the tax benefit without understanding that they violated IRS guidelines. Such applications often met with outright denial or, if the IRS scrutinized the claims after already paying benefits, a demand for repayment of improper claims. 

To protect honest business owners from fraud and reduce the burden on the tax system, which is straining to process and check a deluge of questionable claims, the IRS issued an ERTC moratorium effective at least until the end of 2023. The moratorium will allow the IRS time to examine pending claims. 

How the IRS Will Process Claims Under the Moratorium

So, how can the moratorium affect you as a business owner?

• If you filed for the ERTC and the IRS received your claim before September 14, 2023, standard processing time will extend from 90 to 180 days. Processing could take longer if the claim needs additional supporting documentation.
• If you’re filing a new claim, it will go into a queue for review in 2024. Once the moratorium ends, the IRS will resume processing claims on a first-come, first-served basis.

The IRS will also invest extra resources to screen all ERTC claims and uncover illegitimate claims. Businesses that filed for tax benefits without meeting requirements could face an IRS audit and even a criminal investigation.

Moreover, since businesses file for the ERTC via an amended Form 941-X, there may be processing delays for all such amended forms, even those that don’t include an ERC claim. 

How Business Owners Can Avoid IRS Complications

The regulations surrounding the ERTC benefit are often tricky to understand. To prevent tax issues, you should:

• Review the guidelines and consult a reputable tax professional before filing a new claim
• Revise submitted claims for compliance and, if necessary, withdraw claims that don’t meet eligibility criteria
• Follow IRS guidelines on repaying benefits already received through an erroneous ERC claim

Questions About the ERTC? Contact Dayes Law Firm

Are you wondering whether your business qualifies for the Employee Retention Tax Credit? Contact us at Dayes Law Firm. Our trusted tax lawyers have helped many businesses claim the ERTC while avoiding compliance concerns. We’ll let you know whether you meet ERC eligibility requirements and how the current ERTC moratorium may influence your claim’s processing. 

Give us a call at (800) 503-2000 or fill out our online form to schedule your free consultation today.