The IRS has announced that it will stop processing new employee retention credit (ERC) claims through at least December 31, 2023. This move is in response to promoters who have aggressively encouraged employers to file false or doubtful ERC claims for this refundable credit available to eligible businesses that paid wages after March 12, 2020, through the end of the program to keep their staffs employed during the height of the pandemic. (The IRS has not prohibited taxpayers from submitting new ERC claims. New ERC claims will simply be held in reserve until the IRS once again begins processing claims.)
Additionally, existing ERC claims (those submitted before the IRS’ announcement) will continue to be processed, but the IRS’ processing time has been extended from 90 days to 180 days to provide more time for IRS agents to examine each claim. The IRS is also working to implement a special withdrawal option to allow employers who have submitted doubtful ERC claims to withdraw those claims. Additionally, the agency is working on a program that will allow employers to repay improperly received ERC claims (it is unclear whether these repayments can be made without the threat of criminal investigation).
To offer further guidance to employers on this recent ERC announcement, we asked two professors and authors of ALM’s Tax Facts – Robert Bloink and William H. Byrnes – with opposing political viewpoints to share their opinions about the IRS’ decision to stop processing new ERC...
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