The IRS has announced a moratorium on processing Employee Retention Credit (ERC) claims, through at least the end of 2023. Citing the need to protect taxpayers from fraud, IRS Commissioner Danny Werfel said:
“The IRS is increasingly alarmed about honest small business owners being scammed by unscrupulous actors, and we could no longer tolerate growing evidence of questionable claims pouring in,” Werfel said. “The further we get from the pandemic, the further we see the good intentions of this important program abused. The continued aggressive marketing of these schemes is harming well-meaning businesses and delaying the payment of legitimate claims, which makes it harder to run the rest of the tax system. This harms all taxpayers, not just ERC applicants.”
Commissioner Werfel assured businesses that previously-submitted claims will continue to be processed, albeit at a slower pace, likely designed to ensure strict scruitiny of the applicants.
What’s a business or HR professional to do?
- If you’ve already submitted your ERC application, be patient. Consider that processing time likely will double and may extend well into 2024 and perhaps beyond. So if you were counting on the credit to improve cash flow in 2023, you should wisely be planning another approach.
- If you haven’t yet submitted an ERC application, first – work only with reputable vendors. There are literally hundreds of for-profit vendors advertising on business radio and elsewhere, sending emails, and making cold calls in their effort to snag new business. That said, there are 10s of reputable CPAs and accounting firms locally and regionally that are well-equipped to help businesses with their applications. Use wise judgment in choosing the vendor with which you’ll work.
- And, finally, if you’re intrigued by all the advertising, do your own due diligence about whether your business is likely to qualify. Don’t simply rely on an outsider to make that assessment. As in all things IRS, the taxpayer has an obligation to know the law and to comply with it. That’s true of the ERC process as well.
For questions on this and other human resources-related matters, don’t hesitate to give the attorneys at The Coppola Firm a call at 716.839.9700. We’re here to help.