Reason for the Moratorium:
The IRS imposed the moratorium due to a significant increase in suspect ERTC claim submissions. The agency aims to protect taxpayers and prevent the filing of improper claims. Claims that have already been submitted will undergo detailed compliance reviews.
Impact on Existing Claims:
While existing ERTC claims will continue to be processed, taxpayers should expect delays in processing times. The increased scrutiny and additional documentation requirements may extend the processing period to 180 days or longer.
Warning about Scams:
The IRS has issued warnings about unscrupulous actors promoting ineligible ERTC claims. Employers should remain cautious of unsolicited ads, calls, emails, or text messages offering quick eligibility determinations. Additionally, employers should be wary of promoters requesting large upfront fees or basing their fees on a percentage of the refund amount.
IRS Initiatives for Protecting Taxpayers:
To protect businesses from underhanded promoters and provide relief to victims of fraudulent claims, the IRS is developing new initiatives. These initiatives include a repayment settlement program for businesses that received improper ERTC payments and a special withdrawal option for businesses with pending claims. However, voluntarily withdrawing fraudulent claims will not exempt businesses from potential criminal investigation and prosecution.
Moratorium Period and Processing Times:
The moratorium on processing new claims commenced on September 14, 2023, and is expected to run through at least December 31, 2023. Claims submitted before this date will continue to be processed. As the IRS focuses on audit work and investigations related to suspect claims, the processing of legitimate claims may require additional time and documentation.
Additional Eligibility Guidance:
In order to assist employers in determining their eligibility for the ERTC, the IRS has released an ERC Eligibility Checklist. Employers are encouraged to review this checklist to confirm if they meet the criteria for claiming the credit. It is advisable for employers who require further assistance to seek help from trusted tax professionals.
The IRS moratorium on new ERC claims represents a significant response to the rise in questionable submissions. While existing claims will be processed, delays should be expected due to enhanced compliance reviews. Employers should stay vigilant to avoid falling victim to scam promotions related to the ERTC. By consulting trusted tax professionals and following IRS guidance, businesses can ensure compliance and navigate the intricate process of claiming the Employee Retention Tax Credit.
Here are a few tips to help you in your search for a trusted partner for ERC:
- Look for a payroll or tax company with a strong local presence and commitment to the community.
- Don't just take their word for it - check out their testimonials and online reviews from satisfied clients.
- Visit their website and FAQ information and make sure they provide a clear and comprehensive overview of our services and expertise. It’s also important to be able reach out to them directly with any questions or concerns.
- Ask for references from our satisfied clients, so you can feel confident in your decision.
- Ask about their claims process: is it transparent and efficient? Are they available to guide you through any necessary documentation and forms?
- Is the fee structure is straightforward, with no hidden fees or surprises?
Remember to stay informed and regularly check for updates regarding the ERTC moratorium. Our team will continue monitoring developments in this area and provide any necessary updates.
Disclaimer: This blog post is for informational purposes only and should not be considered as professional tax advice.