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09.20.2023
On September 14, 2023, the IRS announced that it is halting new Employee Retention Credit (ERC) processing requests and will provide tougher review of the estimated 600,000 ERC applications currently in its queue due to the large number of fraudulent claims it has received.
The IRS has continually warned employers about aggressive marketing scams leading the IRS Commissioner Danny Werfel to say ‘We are taking these dramatic steps because the IRS is increasingly alarmed about honest small-business owners being scammed by unscrupulous actors.
Employers should be wary of government-appearing letters, texts, emails, phone calls, radio, TV, and social media advertisements that advise them of their ERC eligibility and encourage them to apply. ERC requests can only be claimed on original or amended federal employment tax returns and the IRS encourages applicants to use trusted tax advisors to determine eligibility. Improper claims must be paid back with possible penalties and interests.
Already the IRS has referred thousands of ERC claims to be audited and hundreds to be criminally investigated. Presently, the IRS is allowing employers who think they no longer qualify for ERC and have pending claims, to withdraw their requests and repay funds received.
According to the IRS, here are ERC eligibility highlights:
“The credit is available to eligible employers that paid qualified wages to some or all employees after March 12, 2020, and before January 1, 2022. Eligibility and credit amount vary depending on when the business impacts occurred. The ERC is not available to individuals.
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