To protect taxpayers from employee retention credit (ERC) scams that pose an unacceptable risk to businesses and the tax system, the IRS has halted the processing of new ERC claims until at least January 2024. The agency said the moratorium is necessary due to a surge in questionable claims, the concerns of tax professionals, and the continued aggressive marketing of the credit to ineligible taxpayers. The IRS will continue processing and paying ERC claims received prior to the moratorium, but noted that increased scrutiny of the claims will result in longer processing times.
The IRS also issued a warning to businesses to be on the lookout for the “wildly aggressive” marketing of misleading or improper ERC claims targeting ineligible taxpayers. The warning was accompanied by a printable version of its ERC checklist that tax preparers can use to explain eligibility for the credit to their clients.
“I commend the IRS for its proactive measures, notably the announcement of an ERC Eligibility Checklist aimed at reducing errors and fraud in the ERC program,” said NATP IRS Liaison Larry Gray. “The rise in claims, exacerbated by misinformation from third-party service promoters, necessitates such actions to safeguard the program’s integrity. Given that ERC is a refund of payroll costs, it is important that these funds are disbursed responsibly and in compliance with the law.”