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IRS Halts New ERC Processing; Criminal Cases Being Worked on Current Claims 

September 15, 2023

A moratorium on processing of new claims through year’s end will allow the IRS to add more safeguards to prevent future abuse and protect businesses from predatory tactics. The IRS is working with the Justice Department to pursue fraud fueled by aggressive marketing.

IR-2023-169, Sept. 14, 2023 – To protect taxpayers from scams, IRS orders immediate stop to new ERC processing amid surge of questionable claims; concerns from tax pros

IRS Commissioner Danny Werfel has ordered the immediate moratorium, beginning Sept. 14, 2023, to run through at least Dec. 31, following growing concerns inside the tax agency from tax professionals as well as media reports that a substantial share of new claims from the aging program are ineligible and increasingly putting businesses at financial risk by being pressured and scammed by aggressive promoters and marketing. 

The IRS continues to work previously filed Employee Retention Credit (ERC) claims received prior to the moratorium, but renewed a reminder that increased fraud concerns means processing times will be longer.  

On July 26, in IR-2023-135 the agency announced it was increasingly shifting its focus to review these claims for compliance concerns, including intensifying audit work and criminal investigations on promoters and businesses filing dubious claims. The IRS announced that hundreds of criminal cases are being worked, and thousands of ERC claims have been referred for audit.

IR-2023-170, Sept. 14, 2023 – Red flags for ERC claims; IRS reminds businesses to watch out for warning signs of aggressive promotion that can mislead people into making improper ERC claims

The credit, also called the Employee Retention Tax Credit or ERTC, is a legitimate pandemic-era tax credit but as time passes, the credit has been increasingly the target of aggressive marketing to businesses that may not qualify for the credit.

Although promoters advertise that ERC submissions are "risk free," there are actually huge risks facing businesses as the IRS increases its audit and criminal investigation work. Hundreds of criminal cases are being worked, and thousands of ERC claims have been referred for audit.

ERC Eligibility Checklist: Understanding This Complex Credit

As a reminder, anyone who improperly claims the ERC must pay it back, possibly with penalties and interest. The IRS wants to help taxpayers avoid this situation, so they prepared a question-and-answer chart to help taxpayers figure out if they may be eligible for the credit.  

Use the chart if you are considering claiming the credit or have already submitted a claim to the IRS. Information on resolving an improperly claimed ERC is included.  

View the ERC Eligibility Checklist

Questions about the content of this Alert should be directed to LCPA Government Relations Director Linda Babin

Be sure to join us at the Louisiana Tax Conference, December 11-12,
when we'll have a session on "Employee Retention Credits: Separating Fact from Fiction as IRS Disputes Get Underway."
Click the Register Here link below for more information.