Important Update: IRS Puts ERC Claims on Hold

On September 14, 2023, the IRS announced a moratorium on new Employee Retention Credit (ERC) claims through at least 2024. This pause came in response to a surge of questionable claims and widespread concerns about fraud fueled by aggressive third-party promoters.

The IRS stressed that while legitimate businesses are still entitled to the credit, it will take time to strengthen safeguards and improve review processes. Employers who already filed an ERC claim before the moratorium will still have their applications processed, but with additional scrutiny and longer wait times.

What This Means for Your Business

• No new claims can be filed until the moratorium is lifted.

• Pending claims are still being reviewed, though processing may be significantly delayed.

• Documentation is more important than ever, and businesses should be prepared for the possibility of audits.

Beware of Scammers

The popularity of the ERC has drawn in unscrupulous promoters who promise “guaranteed refunds” or encourage businesses to apply without reviewing eligibility requirements. Many charge high upfront fees or a large percentage of the refund, putting companies at risk of penalties and repayment if the claim is disallowed.

Red flags include:

• Cold calls or emails promising eligibility without reviewing your facts

• Claims that “every business qualifies”

• Preparers who refuse to sign the return or explain the basis for eligibility

Moving Forward

The IRS has given no clear timeline for when the moratorium will be lifted. Businesses seeking to file new ERC claims must wait until further guidance is issued, and those with pending claims should prepare for extended processing times.