IRS Extends ERC Moratorium

On June 20, 2024, the IRS announced that they would be extending their moratorium on processing of new Employee Retention Credit (ERC) claims. The IRS initially announced the moratorium on September 14, 2023 and has continued to issue extensions as the IRS continues to battle, what it believes is, rampant fraud. Based on statements from IRS Commissioner Danny Werfel, it appears that the IRS is holding out hope for a congressional change to the program. The IRS is hoping for an early closing of the application period and an extension of the statute of limitations to review claims.

The continued moratorium has left businesses with legitimate claims and legitimate need for the funds in a precarious situation. Businesses applying for the ERC only need to file an amended payroll tax return and do not need to provide an explanation of why they may qualify. Many with legitimate claims are frustrated with the slow processing and what many perceive as a lack of real investigation into which claims are real and which are fraudulent.

The IRS also announced that their compliance efforts from erroneous ERC claims has topped $2 billion. More than half of this came from the now closed ERC Voluntary Disclosure Program. The IRS also stated they are considering reopening the program at a worse rate, while leaving open the ERC Withdrawal Program. Currently as of May 31, 2024, the IRS has initiated 450 criminal cases and has thousands of ERC claims under audit.

For a complete review of your ERC situation from a tax attorney please contact us to discuss your options. You may also call (917)-746-2211.