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In the face of a flood of illegitimate claims for the Employee Retention Tax Credit (ERTC), the IRS has imposed an immediate moratorium through at least the end of 2023 on processing new claims for the credit. The reason the IRS cites for the move is the risk of honest small business owners being scammed by unscrupulous promoters who submit questionable claims on their\u00a0behalf.<\/p>\n
The fraud problem<\/strong><\/p>\n The ERTC is a refundable tax credit intended for businesses that 1)\u00a0continued paying employees while they were shut down due to the pandemic in 2020 and 2021, or 2)\u00a0suffered significant declines in gross receipts from March\u00a013, 2020, to December\u00a031, 2021. Eligible employers can receive credits worth up to $26,000 per retained employee. The ERTC can still be claimed on amended\u00a0returns.<\/p>\n The requirements are strict, though. Specifically, you must\u00a0have:<\/p>\n Additional restrictions apply,\u00a0too.<\/p>\n Nonetheless, the potentially high value of the ERTC, combined with the fact that some employers can file claims for it until April\u00a015, 2025, has led to a cottage industry of fraudulent promoters offering to help businesses claim refunds for the credit. They wield inaccurate information to generate business from innocent clients who may pay upfront fees in the thousands of dollars or must pay the promoters a percentage of refunds they\u00a0get.<\/p>\n Victims could end up on the hook for repayment of the credit, along with penalties and interest on top of the fees paid to the promoter. Moreover, as the IRS has noted, promoters may leave out key details, unleashing a \u201cdomino effect of tax problems\u201d for unsuspecting businesses.<\/p>\n The impact of the moratorium<\/strong><\/p>\n Payouts on legitimate claims already filed will continue during the moratorium period. But taxpayers should expect a lengthier wait. The IRS has extended the standard processing goal of 90\u00a0days to 180\u00a0days and potentially much longer for claims flagged for further review or\u00a0audit.<\/p>\n Increased fraud worries are prompting the agency to shift its review focus to compliance concerns. The shift includes intensified audits and criminal investigations of both promoters and businesses filing suspect\u00a0claims.<\/p>\n The IRS also is working to develop new initiatives to aid businesses that have fallen prey to\u00a0aggressive promoters. For example, it expects to soon offer a settlement program that will\u00a0allow those who received an improper ERTC payment to avoid penalties and future compliance action by repaying the amount received.<\/p>\n If you claimed the credit, but your claim hasn\u2019t yet been processed or paid, you can withdraw your claim if you now believe it was improper. You can withdraw even if your case is already under or awaiting audit. The IRS says this option is available for filers of the more than 600,000 claims currently awaiting processing.<\/p>\n Still considering claiming the credit?<\/strong><\/p>\n The IRS urges taxpayers to carefully review the ERTC guidelines during the moratorium period. Legitimate claimants shouldn\u2019t be dissuaded, but, as the IRS says, it\u2019s best to confirm the validity of your claim with a \u201ctrusted tax professional \u2014 not a tax promoter or marketing firm looking to make money\u201d by taking a \u201cbig chunk\u201d out of your claim. And don\u2019t count on seeing payment of your credit anytime soon. Contact us if you have questions regarding the\u00a0ERTC.<\/p>\n \u00a9 2023<\/em> \u00a0<\/p>\n <\/body> In the face of a flood of illegitimate claims for the Employee Retention Tax Credit (ERTC), the IRS has imposed an immediate moratorium through at least the end of 2023 on processing new claims for the credit. The reason the IRS cites for the move is the risk of honest small business owners being scammed […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7,59,10],"tags":[8,11,12],"class_list":["post-16754","post","type-post","status-publish","format-standard","hentry","category-articles","category-etra","category-news","tag-articles","tag-news","tag-updates"],"_links":{"self":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts\/16754","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/comments?post=16754"}],"version-history":[{"count":1,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts\/16754\/revisions"}],"predecessor-version":[{"id":16755,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts\/16754\/revisions\/16755"}],"wp:attachment":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/media?parent=16754"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/categories?post=16754"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/tags?post=16754"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}\n
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