This decision aims to protect honest small business owners from scams and safeguard the integrity of the ERC program. As a business law firm with a track record of processing over 350 ERC claims, we want to keep our clients and potential clients informed about these developments and offer our expertise in navigating ERC-related challenges.
Understanding the IRS Moratorium:
- IRS Commissioner Danny Werfel initiated the immediate moratorium, effective from September 14, 2023, until at least December 31, 2023, in response to mounting concerns about ineligible claims and aggressive marketing tactics. During this time, the IRS will not process any newly filed claims.
- The IRS will continue processing previously filed ERC claims but warns of longer processing times due to increased fraud concerns and compliance reviews.
- Existing ERC claims, which typically had a 90-day processing goal, may now take up to 180 days or more.
- The IRS may request additional documentation from taxpayers to ensure the legitimacy of their claims.
Protecting Businesses from Fraud:
- The enhanced compliance review of existing claims is critical to prevent fraud and protect businesses from potential penalties and interest payments associated with improper claims.
- The IRS is working to add new safeguards to the ERC program to deter fraudulent claims and protect taxpayers.
- Taxpayers are urged to consult IRS guidance and tools to determine ERC eligibility, including a new question-and-answer guide.
- The IRS is developing initiatives to assist businesses victimized by aggressive promoters, including a repayment settlement program for those who received improper ERC payments.
Special Withdrawal Option:
- A special withdrawal option is in development for taxpayers with pending ERC claims to avoid repayment issues and promoter contingency fees.
- However, individuals who have filed fraudulent claims or conspired to do so should be aware that withdrawing a fraudulent claim does not exempt them from potential criminal investigation and prosecution.
Collaboration with the Justice Department:
- The IRS is working closely with the Justice Department to address fraud in the ERC program and target promoters who disregard the rules.
- The IRS Criminal Investigation Division is actively identifying fraudulent claims and promoters for potential prosecution.
ERC Program Overview:
- The ERC, or Employee Retention Tax Credit, is a refundable tax credit designed to support businesses that retained employees during the COVID-19 pandemic, especially when their operations were suspended or experienced a significant decline in gross receipts.
- The program is complex, with strict requirements to ensure assistance reaches businesses genuinely affected by the pandemic.
- The IRS has received approximately 3.6 million ERC claims since the program's inception.
What Businesses Should Do:
- For businesses with pending ERC claims, expect extended processing times and compliance scrutiny.
- Consider consulting a trusted tax professional before filing an ERC claim to ensure eligibility and compliance.
- Consider Withdrawing an existing claim if you believe it was submitted improperly.
- Wait for the IRS ERC settlement program, which will provide options for businesses to repay ERC claims and avoid penalties.
- Be cautious of red flags indicating aggressive marketing and questionable ERC claims.
If you're facing an IRS ERC audit or suspect that your ERC claim was incorrectly filed, you may be worried about potential financial strain, operational disruption, compliance worries, and potential harm to your business's reputation. There's also the looming prospect of legal consequences. With these multifaceted challenges, it's crucial to seek professional guidance to navigate through these difficulties effectively.
As a business law firm experienced in processing hundreds of ERC claims, we are here to assist you in ensuring your claims are legitimate and compliant with IRS guidelines. If you receive notice from the IRS of an ERC audit or suspect that your ERC claim was incorrectly filed by another company, contact us immediately for guidance and support.
Together with our sister company, Pennywise Tax Strategies, we're here to help. Your business's financial well-being is our priority, and we are committed to helping you navigate these challenging times while safeguarding your interests.
