By Jennifer Rohen and Carey Heyman of CliftonLarsonAllen
Originally published September 25, 2023
Over the past couple of months, the Internal Revenue Service (IRS) has issued multiple warnings, published a generic legal advice memorandum, and even opened their 2023 “Dirty Dozen” article cautioning taxpayers of aggressive Employee Retention Credit (ERC) program schemes. On September 14, 2023, the IRS took a more drastic measure, announcing a temporary moratorium on the processing of new ERC refund claims until 2024. The goal of the temporary suspension will be to use the rest of 2023 to gain a better handle on potentially fraudulent claims and to identify claims that could be deemed as less than reputable.
As a reminder, the ERC is a tax credit for businesses and tax-exempt organizations that continued to pay their employees during the COVID-19 pandemic, either when their business was shut down due to a government order or when their company suffered a significant decline in gross receipts, during certain eligibility periods in 2020 and 2021.
How will taxpayers be impacted by the IRS’ announcement?
· Taxpayers can continue to file refund claims, but should verify that their claims are supported by appropriate eligibility documentation.
· Employers should anticipate longer wait times to receive their refund payments.
· The IRS will continue to process ERC refunds for previously submitted claims.
· Anticipate a request from the IRS for additional information/documentation, prior to the processing of the claim.
· Future guidance is expected from the IRS on how an employer that no longer believes it is eligible for the credit can return the money.
“There is no need to panic. If you claimed the ERC and are worried about eligibility, now is an excellent time to review your filing with a qualified tax professional.”
– Jennifer Rohen, Principal, Business Incentives Consulting Practice Leader
Jennifer Rohen is a Principal and Business Incentives Consulting Practice Leader with ClifonLarsonAllen. She can be reached at jennifer.rohen@claconnect.com or 314.925.4326.
Carey Heyman is Managing Principal of the Real Estate Industry with ClifonLarsonAllen. He can be reached at carey.heyman@claconnect.com or 310.288.4220.
The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting, investment, or tax advice or opinion provided by CliftonLarsonAllen LLP (CliftonLarsonAllen) to the reader. For more information, visit CLAconnect.com.
CLA exists to create opportunities for our clients, our people, and our communities through our industry-focused wealth advisory, digital, audit, tax, consulting, and outsourcing services. Investment advisory services are offered through CliftonLarsonAllen Wealth Advisors, LLC, an SEC-registered investment advisor.