IRS Announces Pause to Processing of New Employee Retention Claims Until 2024
Over the past couple of months, the Internal Revenue Service (IRS) has issued multiple warnings, published a generic legal advice memorandum, and even opened their 2023 “Dirty Dozen” article cautioning taxpayers of aggressive Employee Retention Credit (ERC) program schemes. On September 14, 2023, the IRS took a more drastic measure, announcing a temporary moratorium on the processing of new ERC refund claims until 2024. The goal of the temporary suspension will be to use the rest of 2023 to gain a better handle on potentially fraudulent claims and to identify claims that could be deemed as less than reputable.
As a reminder, the ERC is a tax credit for businesses and tax-exempt organizations that continued to pay their employees during the COVID-19 pandemic, either when their business was shut down due to a government order or when their company suffered a significant decline in gross receipts, during certain eligibility periods in 2020 and 2021.
How will taxpayers be impacted by the IRS’ announcement?
- Taxpayers can continue to file refund claims, but should verify that their claims are supported by appropriate eligibility documentation.
- Employers should anticipate longer wait times to receive their refund payments.
- The IRS will continue to process ERC refunds for previously submitted claims.
- Anticipate a request from the IRS for additional information/documentation, prior to the processing of the claim.
- Future guidance is expected from the IRS on how an employer that no longer believes it is eligible for the credit can return the money.
“There is no need to panic. If you claimed the ERC and are worried about eligibility, now is an excellent time to review your filing with a qualified tax professional.”
– Jennifer Rohen, Principal, Business Incentives Consulting Practice Leader
Source: IRS.gov
- Carey M. Heyman, CPA
- Managing Principal of Industry - Real Estate
- CliftonLarsonAllen LLP
- Century City (Los Angeles)
Carey is the Managing Principal of the Real Estate Industry at CLA. He is a trusted advisor with close to 20 years of experience providing accounting, assurance, tax, and consulting services to real estate industry owners, operators, family offices, developers and syndicators. Carey has a strong track record of helping clients build and retain capital by leveraging tax- and cost-saving strategies and employing tax credits and incentives. He also consults with high net worth individuals, large family groups, and owners of closely-held businesses on all aspects of tax planning, estate planning, and retirement planning.
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