IRS Pauses Processing of New ERC Claims Due to Scams

On September 14, the IRS announced it would immediately stop processing new claims for the employee retention credit (ERC) through at least December 31 to help protect businesses from scams [IR-2023-169, 9-14-23]. The IRS will process ERC claims that have already been filed, but processing times will be longer due to fraud concerns.

IRS Is Developing New Initiatives

The IRS said it is developing initiatives to help businesses that were victims of aggressive ERC promoters, which includes a settlement program for repayments of an improperly received ERC payment and a special withdrawal option for businesses that improperly filed an ERC claim. The IRS said it will provide more details about the programs later.

What Businesses Should Do

Businesses that have already filed and have a pending ERC claim should carefully review eligibility guidelines. The IRS said it is seeing repeated instances of businesses improperly citing supply chain issues as a basis for an ERC claim when a business with those issues will very rarely meet the eligibility criteria. Businesses that are deciding whether to file a claim should consider reviewing the guidelines and waiting to file. The IRS suggests that these businesses carefully review the ERC guidelines during the processing moratorium period.

The IRS updated its ERC FAQs and created an eligibility checklist to help businesses understand if they are eligible for the credit.

To learn more about federal and state laws, regulations, and information to keep your company’s payroll operations in compliance, check out Payroll Source Plus!

Rayna Alexander, Esq., is Editor of Payroll Information Resources for PayrollOrg.