IRS Halts ERC Processing

The IRS issued a moratorium on the processing of new claims for the Employee Retention Credit (ERC) effective on September 14, 2023, through at least the end of the year. This moratorium is in response to the rising level of concerns surrounding questionable claims and aggressive marketing to ineligible applicants. Additionally, the IRS has issued a new questions and answer guide for reviewing eligibility.

As part of the IRS press release, there was emphasize on claims received before the moratorium. The IRS has ensured that they will continue to process these claims, but with enhanced compliance review. The enhanced compliance review will extend the processing goal from 90 days to 180 days, with the potential to extend much further if the claim faces further review or audit. Taxpayers may be requested to provide additional supporting documentation to legitimize their claim.

The IRS has provided advice for taxpayers still awaiting their ERC claims to be processed, based on where they are in the process:

For those that filed ERC claims before the moratorium – The IRS is continuing to process the claims but at a slower rate to combat fraudulent claims from being paid. There is no means available to expedite any individual claim. Additionally, the IRS encourages taxpayers to seek the advice of their trusted tax professional to review ERC eligibility, as additional guidance on withdrawing a claim before it is processed will be released in the near future.

For those who have not yet filed a claim – The IRS is encouraging taxpayers to carefully review the ERC guidelines and seek the advice of trusted tax professionals that understand the complex rules surrounding ERC. The IRS will still accept claims but will not begin processing until the moratorium is lifted.

For those who have received ERC claims – The IRS will be releasing guidance on repaying ERC claims that the taxpayer no longer believes they properly qualify for. This repayment process will assist taxpayers to avoid penalties and future compliance actions.

HBK will continue to monitor for additional guidance. If you have any questions please reach out to your HBK representative.

About the Author(s)
Donald is a Senior Tax Manager in the Tax Advisory Group of HBK CPAs and Consultants. Donald has over nine years of experience in taxation with a focus on privately held businesses and high-net-worth individuals. His areas of expertise include partnerships, S corporations, C corporations and individual taxation. He also assists his clients with year-end planning, merger and acquisition planning, choice of entity planning, and conflict resolution.
Hill, Barth & King LLC has prepared this material for informational purposes only. Any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or under any state or local tax law or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. Please do not hesitate to contact us if you have any questions regarding the matter.