In recent months, concerns have been mounting over a surge in improper claims for the Employee Retention Credit (ERC) program. To combat this issue, the Internal Revenue Service (IRS) has taken a significant step by announcing a moratorium on processing new ERC claims, effective immediately and lasting until at least the end of this year. This move aims to protect honest small business owners from scams and predatory tactics that have become all too common. At Trout CPA, we are here to shed light on this important development and to emphasize our commitment to assisting businesses in navigating these complex tax matters.
The Rising Issue of Improper ERC Claims
The ERC was designed as a lifeline for businesses during the COVID-19 pandemic, offering a refundable tax credit to those who continued to pay their employees during periods of business disruption. However, as time has passed and we've moved further from the pandemic's peak, there has been a growing concern that the program is being exploited. Reports have indicated that a significant share of new ERC claims are ineligible, putting businesses at financial risk.
Aggressive marketing tactics, fueled by unscrupulous promoters, have pressured businesses into applying for the ERC even when they may not qualify. This has not only led to an influx of questionable claims but has also delayed the payment of legitimate claims, impacting businesses and the overall tax system.
IRS Takes Action
In response to these challenges, IRS Commissioner Danny Werfel has initiated the moratorium to allow the IRS to add additional safeguards and prevent future abuse of the program. While existing ERC claims will continue to be processed, businesses should expect longer processing times due to increased compliance reviews. This heightened scrutiny is critical to protect against fraud and ensure that businesses do not face penalties or interest payments stemming from improper claims. The IRS also released the ERC Eligibility Checklist, which can help a business quickly decide if they may qualify.
How Trout CPA Can Assist
At Trout CPA, we understand the complexities of tax credits like the ERC. Our team of experienced professionals is well-versed in tax matters and can provide valuable guidance to businesses navigating these intricate processes. We are committed to helping our clients make informed decisions, ensuring compliance, and maximizing available benefits.
If you find yourself facing questions or concerns related to the ERC program during this moratorium period, we encourage you to reach out to our experts. We can help you:
- Verify Eligibility: We will carefully review your eligibility for the ERC and provide clear guidance on whether your business qualifies for this credit.
- Navigate Compliance: Our professionals can assist with compliance measures, ensuring that your claims meet the necessary requirements to avoid future complications.
- Address Pending Claims: If you have a pending ERC claim, we can help you navigate the evolving guidelines and determine the best course of action.
- Prepare for the Settlement Program: When the IRS introduces the settlement program for repayments, we will provide guidance on the most advantageous options for your business.
The IRS's moratorium on processing new ERC claims underscores the importance of carefully navigating tax matters to protect your business from potential risks and penalties. At Trout CPA, our dedicated team is here to assist you every step of the way. Contact us today to ensure that your business is making informed decisions regarding the Employee Retention Credit and other tax-related issues. We're here to help you achieve financial peace of mind.
For assistance with ERC, please complete the form below to schedule a 10-minute consultation with Tax Partner & ERC Specialist Dan Chodan, CPA.