August 13, 2024 - IRS Accelerating Processing of ERC Claims

The IRS has announced additional actions it is taking to help small businesses with their employee retention credit (ERC) claims and prevent improper payments to ineligible taxpayers. The steps being taken include accelerating the payment of some ERC claims it has received and continuing its compliance work after the agency was flooded with claims following misleading marketing of the credit.

The moratorium period on new ERC claims that has been in place since September 2023 will be “shifted” and the IRS will begin processing claims filed between Sept. 14, 2023, and Jan. 31, 2024. As with the rest of its ERC inventory, the agency will focus on the highest and lowest risk claims where the IRS has a sound basis for paying or denying the claim.

The IRS is moving too quickly pay 50,000 of the claims it has received and deemed to be low risk. Payments will begin in September and another large block of low-risk claims will be processed and paid in the fall. The agency has also sent out 28,000 disallowance letters in recent weeks to businesses with claims that showed a high risk of being incorrect, preventing up to $5 billion in improper payments.

In those cases where ERC claims have been improperly denied, the IRS said it will work with taxpayers to ensure any errors are corrected. It reminded businesses with denied ERC claims that they can file an administrative appeal by responding back to the address of the denial letter. While some recent mailings omitted a paragraph highlighting the process for filing an appeal to the IRS or district court, the agency is taking steps to ensure that taxpayers receive notices with the correct language.