IRS stops ERC claims through Dec. 31, 2023

To protect honest small business owners from scams, and based on a rising concerns about a flood of improper Employee Retention Credit (ERC) claims, the IRS recently announced an immediate moratorium through at least the end of the year on processing new claims for the pandemic-era relief program.

IRS Commissioner Danny Werfel ordered the immediate moratorium to run through at least Dec. 31. This follows growing concerns inside the IRS from tax professionals as well as media reports that a substantial share of new claims from the aging program are ineligible and increasingly putting businesses at financial risk by being pressured and scammed by aggressive promoters and marketing.

The IRS continues to work previously filed ERC claims received prior to the moratorium, but renewed a reminder that increased fraud concerns means processing times will be longer. On July 26, 2023, the agency announced it was increasingly shifting its focus to review these claims for compliance concerns, including intensifying audit work and criminal investigations on promoters and businesses filing dubious claims.

The IRS emphasizes that payouts for these claims will continue during the moratorium period, but at a slower pace due to the detailed compliance reviews. With the stricter compliance reviews in place during this period, existing ERC claims will go from a standard processing goal of 90 days to 180 days, and much longer, if the claim faces further review or audit. The IRS may also seek additional documentation from the taxpayer to ensure it is a legitimate claim.