Recently, the IRS has issued a moratorium putting a hold on processing new Employee Retention Credit claims due to a surge in improper filing and predatory tactics by companies who are less than reputable when it relates to the filing of these claims.
The ERC is a refundable tax credit for businesses and tax exempt organizations that were impacted during the COVID-19 pandemic. Generally, eligibility for this credit allowed businesses to claim a refund for qualified wages, and certain health insurance costs paid to employees during a specific time period at the height of COVID-19. The credit was taken against the employer’s share of Social Security taxes paid and can be claimed against 50% of qualified wages paid, up to $10,000 per employee annually. Employers would need to file amended payroll tax forms to receive this credit.
The IRS is allowing the withdrawal of pending claims if employers think their business no longer qualifies. The agency intends to give tougher scrutiny on the existing queue of more than 600,000 requests for this credit according to the Wall Street Journal.
How Could This Impact You?
1. Employers can now expect longer wait times of up to a year for ERC processing and additional documentation may be required from the employer prior to completing the claim.
2. The IRS encourages taxpayers to utilize a qualified tax professional or accounting firm when attempting to claim the ERC.
How We Can Help
Contact us if you are an employer considering whether you may be eligible for the credit. We can assist in determining eligibility while providing you with ongoing support and additional services as needed.