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Navigating IRS Updates: Employee Retention Credit & Your Business

IRS Announces Moratorium on ERC Claims

In a significant move, the Internal Revenue Service (IRS) has imposed a moratorium on processing new claims for the Employee Retention Credit until December 31, 2023. This decision comes in response to a concerning surge in fraudulent claims related to this tax credit. If you’re in the process of claiming ERC benefits, don’t worry; your current claims will still be processed, but expect some delays due to the increased scrutiny. It’s essential to stay updated and patient during this time.

Statute of Limitations Remains Unchanged

Despite the temporary moratorium, there’s an important point to note: the statute of limitations for filing ERC claims for the tax year 2020 remains unchanged. You have until April 15, 2024, to submit your claims for this period. So, if you qualify for ERC benefits and haven’t filed yet, there’s no need to panic. You still have time to take advantage of this valuable tax credit.

Government Shutdown Concerns

The IRS has expressed concerns about processing ERC claims related to government shutdowns. They anticipate that businesses meeting the criteria under these circumstances will be a rare exception. This aligns with our experience and the fact that the majority of our clients have qualified for ERC based on drops in gross receipts rather than government shutdowns. A key distinction.

Conclusion: Take Action

In conclusion, while the IRS moratorium on new ERC claims may present challenges, it’s not an insurmountable obstacle. If you believe your business qualifies for the Employee Retention Credit, we recommend taking the following actions:

  • Stay Informed: Continue to monitor updates from the IRS and our firm for the latest information on ERC processing.
  • Prepare Your Documents: Use this extra time to gather and organize all the necessary documentation to support your ERC claim.
  • Patience is Key: Understand that delays are expected, and your patience will be essential during this period.

We understand that ERC benefits can significantly impact your business’s financial health. However, it’s crucial to be aware that any claims submitted now are unlikely to be released until at least June 2024. Reach out to us for guidance and assistance in navigating the ERC claims process. We’re here to help you every step of the way. Remember, your financial well-being is our priority, and we’re dedicated to assisting you in achieving the best possible outcomes within the current IRS guidelines.

About the Author

Nicholas Preusch, CPA, JD, LLM

Nick’s expertise includes helping high wealth individual and large business entities with complex tax compliance, along with specializing in international, non-for-profit tax issues, and tax ethics issues. He has used his tax expertise not only to serve his clients, but also his peers. He has authored publications for the AICPA’s Journal of Accountancy, AICPA’s Tax Advisor, NATP’s Tax Pro Journal, and CCH’s Journal of Tax Practice and Procedure and co-authored a textbook, Tax Preparer Penalties and Circular 230 Enforcement, published by Thomas Reuters. He has also lectured nationally on topics such as ethics, complex tax transactions, and IRS practice and procedure..