Finance ERC Blog
BREAKING NEWS: IRS SLOWS ERC REFUND CHECKS
Wall Street Journal Reports
IRS Slows Down Employee Retention Credit Refunds Amid Fraud Concerns
(September 6, 2023)
On September 6, 2023, the Wall Street Journal reported that the Internal Revenue Service (IRS) has decided to slow the processing of tax refunds related to the Employee Retention Credit (ERC). This decision comes as the IRS cites concerns over fraudulent and inflated claims. Here’s a summarized overview:
Concerns: The IRS expressed deep concerns about the potential scamming of small businesses and dubious claims for the ERC. These claims have surged due to aggressive marketing targeting the business community.
Background: Congress introduced the ERC in 2020 as a measure against the economic effects of the COVID-19 pandemic. The objective was to incentivize employers to retain employees during the pandemic’s economic downturn. Eligible businesses could claim up to $26,000 per employee. Though the tax break expired in September 2021, employers can amend their payroll tax returns and claim the credit up to three years later. This has led to a surge in claims.
Rise of ERC Firms: With the increasing demand for ERC claims, many advisory firms have sprouted up, promoting the credit to businesses. Often, these firms charge a hefty fee, often higher than what traditional accountants might charge. By early March, the IRS had disbursed over $150 billion in ERC refunds. This figure grew to approximately $220 billion by July, three times the original congressional estimates.
The Internal Revenue Service (IRS) is slowing down tax refund payments to employers participating in the pandemic-era Employee Retention Tax Credit (ERC) program due to concerns about fraudulent and overstated claims.
IRS Action: Facing concerns about potential fraud and overstated claims, the IRS has taken a more deliberate approach, thoroughly examining each application, leading to slowed refunds. They have also advised businesses to be cautious about using ERC firms that charge large fees or commission-based rates. To further address these issues, the IRS is considering a settlement-based approach for those disclosing their transactions, rather than exhaustive individual audits. They may also suggest to Congress a shortened deadline for amended tax returns claiming ERC refunds.
Reactions: While some support the IRS’s precautions, others, like business owners and lawmakers, have expressed concerns about the refund backlog. The National Association of Professional Employer Organizations criticized the IRS, stating they are using fraud as a shield against disbursing rightful claims. Meanwhile, the American Institute of Certified Public Accountants acknowledged the challenge for the IRS to process valid claims promptly while also weeding out the fraudulent ones.
This report indicates a complex situation, with the IRS caught between ensuring financial aid reaches those who genuinely need it and curbing potential misuse of taxpayer dollars. Here’s a LINK to the article for your reference.
Considering this substantial delay, our ERC financing program offers a strategic solution for Business Owners and ERC Providers.
FOR BUSINESS OWNERS:
Fast Application & Approval: Submit your claim details swiftly and receive prompt feedback. Don’t let prolonged IRS delays impede your cash flow.
Immediate Financing: Access your ERC funds without the extended wait. Our program has no cash payments; we get paid when the IRS checks arrive.
FOR ERC PROVIDERS:
Timely Solution: Informing your clients about this landscape shift is crucial, presenting a perfect opportunity for Finance ERC’s solution to provide clients with their ERC money today.
Key Highlight: You get paid today. Your clients get paid today. We get paid when the check comes from the IRS.
All content and information in this post is for informational and educational purposes only. It does not constitute professional advice.
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