As Reported by the IRS (9/14/23)
IRS Suspends New ERC Filings and Delays Existing Ones
The Internal Revenue Service (IRS) has ceased processing new Employee Retention Credit (ERC) claims until at least 2024, owing to concerns over a surge in fraudulent and inflated applications.
The IRS will be intensifying scrutiny of the existing backlog of more than 600,000 requests. Employers with current claims in progress have the option to withdraw or repay their refunds if they believe they no longer meet the requirements.
The proliferation of ERC consulting firms has surged due to the lucrative potential of the credit, with businesses encouraged to claim up to $26,000 per employee. Such aggressive marketing campaigns have put immense pressure on the IRS, leading to this halt.
Claims have been continuously filed, despite warnings from the IRS. They’ve noted that over the credit’s lifetime, a total of 3.6 million claims have been received, with 15% of these coming in the last 90 days alone.
The total cost from ERC claims has reached an astounding $230 billion, triple the initial congressional estimates.
The IRS has begun referring thousands of claims for audits. Employers are cautioned that falsely claiming the credit can result in penalties and interest.
The Employee Retention Credit was a product of Congress in 2020, intended as an economic stimulus to encourage businesses to retain their employees amidst the challenges of the pandemic. However, the demand and associated costs skyrocketed beyond the initial expectations of lawmakers and officials.
This sudden influx of claims is largely attributed to a rapidly growing industry that aggressively markets the ERC to small businesses and nonprofits. IRS Commissioner Danny Werfel voiced concerns over honest business owners potentially being misled by such dubious campaigns.
Firms advocating for the credit argue they’re helping entities receive funds they’re rightfully entitled to. However, many professionals, including accountants, have noted a significant number of claims riddled with errors or submitted by ineligible employers.
In light of these challenges, the IRS aims to provide businesses the tools and information to assess their genuine eligibility, with hopes of streamlining the process and ensuring rightful claimants receive their dues.
What This Means For You:
If you’ve recently filed an ERC claim, expect processing delays extending into 2024.
For pending claims, stay alert for details on how to withdraw or adjust them.
Those who’ve already received refunds and suspect they might not have been eligible will soon receive guidance on repayment procedures and potential settlements.
Considering this substantial delay, our ERC financing program offers a strategic solution for Business Owners and ERC Providers.
FOR BUSINESS OWNERS:
Continued Financing Support: At Finance ERC, we remain committed to our mission of providing timely financial solutions by providing liquidity for a business against their current ERC filing. Despite the IRS delays, we are actively and swiftly funding businesses. This presents a fantastic opportunity for you to bridge the gap and avoid the prolonged waits introduced by the IRS.
FOR ERC PROVIDERS:
Strategic Partnership: For our partners specializing in ERC filing, we understand that the recent changes may impact your cash flow and client relations. Let’s turn this challenge into an opportunity. We are more than willing to collaborate on a strategy to inform your client base that there’s a viable solution at hand. Rather than leaving them uncertain and waiting for the extended IRS processing, let’s present an alternative that can ensure timely access to their ERC funds.
All content and information in this post is for informational and educational purposes only. It does not constitute professional advice.
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