2023-09-29 04:02:00
He Employee Retention Credit (ERC)is a complex tax credit for tax-exempt businesses and organizations that continued to pay their employees during the COVID-19 pandemic when they were closed due to a government order, had a significant decline in gross receipts, or qualified as a new business in recovery . Eligibility requirements are different, depending on the 2020 and 2021 periods for which the ERC is claimed.
The IRS continues to see aggressive marketing that entices ineligible taxpayers to claim the ERC. While the credit is real, many developers aggressively misrepresent who can qualify for the credits. In many cases, the IRS sees promoters deceive businesses and organizations into believing they are eligible when they are not.
As a reminder, anyone who improperly claims the ERC will have to pay it back, possibly with penalties and interest. Some taxpayers may even face criminal prosecution. Taxpayers are encouraged to review IRS guidance and tools to help determineCKD eligibility includingFrequent questions and a newquestion and answer guideto help businesses understand if they are truly eligible for credit.
On September 14, 2023, the IRS advertisementan immediate moratorium on processing new claims until at least December 31, 2023. This will give the IRS time to add more safeguards to prevent future abuses and protect companies from predatory tactics.
The IRS emphasizes that payments for any claims filed before the moratorium began will continue, but the IRS will process claims at a slower pace due to detailed compliance reviews. With the stricter compliance reviews implemented during this period, existing ERC claims will move from a standard processing goal of 90 days to 180 days, and much longer if the claim faces additional review or audit. The IRS may also request additional documentation from the taxpayer to ensure it is a legitimate claim.
Resolve an inappropriate ERC complaint
The IRS is developing new initiatives to help businesses that were victims of aggressive promoters. This includes a refund settlement program for those who received an inadequate ERC payment; More details will be available this fall.
There are currently more than 600,000 ERC claims pending processing. If you incorrectly claimed the ERC on an amended return, you may withdraw your amended return that included your ERC claim as long as your claim has not been processed and paid. Requesting a withdrawal means you would be asking the IRS not to process your entire amended return that included your CKD claim. This option, which can be used by taxpayers whose claim has not yet been paid, will allow taxpayers, many of them small businesses that were deceived by the developers, to avoid potential payment problems and pay contingency fees to the developers. More details will be available shortly.
However, those who have intentionally submitted fraudulent claims or conspired to do so should be aware that withdrawing a fraudulent claim will not exempt them from potential criminal investigation and prosecution.
The IRS is also working on a reconciliation initiative for taxpayers who believe they should not have claimed the ERC and want to refund it. CheckIRS.gov/erc y IRS Operations: Status of Mission Critical Function(Filed in 2022/Form 941 Processing Status) fo updates.
Additional Resources
#Waiting #employee #retention #credit #refund #TAS