On September 14, 2023, the IRS announced an immediate halt to new Employee Retention Credit processing. This moratorium serves as an effort to protect taxpayers from an increasing number of scams. Amid significant concerns from tax professionals, an increase in the number of questionable claims, and aggressive marketing to applicants who aren’t eligible for the credit, IRS officials have highlighted an unacceptable risk both to businesses and the tax system.
This moratorium means that the IRS will not accept any new or amended Forms 941-X claiming the ERTC during the entirety of the halted period. It will remain in effect through the end of the year at least. The IRS has recommended that businesses and individuals avoid submitting additional claims until the lifting of the moratorium.
The processing halt does not impact claims received prior to September 13, 2023. These will still be processed, although the processing times have increased due to increased fraud concerns. Earlier in the year, the agency announced its plan to shift focus and review all claims for potential compliance concerns. The additional review efforts intensified the work involved in processing claims, as well as created more work around investigating potential criminal actions by businesses that have filed false claims and promoters seeking to scam businesses.
Approved claims will still be paid out during the moratorium period, albeit at a slower pace. The goal to process ERC claims submitted prior to the moratorium has increased from 90 to 180 days, with some claims taking longer. If you have already submitted a claim, you may receive a request from the IRS for additional documentation to ensure that it is legitimate.
False ERC claims put business owners in legal trouble, potentially facing fraud risks, penalties, and interest payments. The IRS aims to protect honest individuals who may get scammed or coerced into submitting claims. All business owners considering filing ERC claims should consult with a trusted tax professional with an understanding of the complex rules.
Additionally, the IRS is working to finalize details for two additional programs:
- #1: A claim withdrawal process for employers that believe claims were filed erroneously. The IRS is establishing a program that would allow these employers to withdraw claims without penalty. Additional details are forthcoming.
- #2: A settlement program that would allow employers to withdraw their claims after receiving funds. Additional details are forthcoming.
You can also review the resources and tools on the IRS website, such as:
- ERC eligibility guidelines
- Frequently asked questions
- Q&A guide (added 9-14-2023)
Review the full details of the IRS announcement here.
This article is informational and does not constitute legal or financial advice. Consult with an employment lawyer or accountant for additional clarification on how these changes impact your company.