The IRS is on a tear against improper employee retention credit (ERC) claims. Here are recent actions taken by the IRS:
1. Stop to Processing New ERC Claims
On September 15, 2023, the IRS announced a temporary halt on processing new ERC claims until after the end of this year at the very least. Why the stop? The IRS pinpointed a surge in improper ERC claims as the core issue. Lots of promoters and fly-by-night organizations have been born from trying to make a dollar pushing the filings of ERC claims. The IRS hopes to end these with this halt.
2. Slowdown in Processing of Existing Claims
The IRS has more than 600,000 ERC claims in its processing queue.
Instead of its standard processing goal of 90 days for the claims in process, the new goal is 180 days—and much longer if the claim needs further review or audit. Those with claims in process will need to continue to be patient.
3. IRS Tells You to Watch Out for Red Flags
The ERC is a legitimate tax credit. But the IRS notes that the credit has been increasingly the target of aggressive marketing to businesses that may not qualify for the credit.
In a September 14, 2023, news release, the IRS warns businesses to beware of nefarious actors who improperly assist businesses in claiming credits for which they don’t qualify.
The IRS is correct in that you need to beware. Say your promoter helps you file for a $100,000 credit, and you pay the promoter 25 percent ($25,000). Say next, the IRS disallows your claim. You could be out the $25,000 fee you paid the promoter.
4. IRS Hiring 3,700 New Employees, Primarily for Audits
In this hiring effort, and somewhat under the radar, is the fact that the IRS wants this new audit workforce to examine high-income earners, partnerships, large corporations, and promoters.
On the promoter front, the IRS wants to examine promoters aggressively peddling abusive schemes, including aggressive ERC claims
Questions?
If you have questions about any of these items, please contact TrueBlaze Advisors so we can help.