On September 14, 2023, the Internal Revenue Service (IRS) released Employee Retention Credit (ERC) guidance placing a moratorium on processing new ERC claims due to a surge in questionable claim submissions. Claims already submitted will continue to be processed, but at a slower rate due to detailed compliance reviews. The guidance included a caution about using entities that aggressively market and promote the submission of ineligible ERC claims, explained the reasons for the moratorium on claims processing, and discussed new guidance to assist employers in determining ERC eligibility.

The moratorium was put in place following the IRS’s recent issuance of final regulations authorizing the assessment and recapture of erroneous refunds of ERCs and other COVID-19 pandemic-related tax credits.

The ERC was included in the Coronavirus Aid, Relief, and Economic Security (CARES) Act to provide businesses whose operations were fully or partially suspended due to government orders during the height of the COVID-19 pandemic with a refundable credit against the employer component of employment taxes, equal to 50 percent of qualified wages paid in 2020. The American Rescue Plan Act, enacted in March 2021, expanded the credit to 70 percent of qualified wages paid in 2021. The Infrastructure Investment and Jobs Act, enacted on November 15, 2021, retroactively eliminated the ability to file ERC claims for eligible wages paid after September 30, 2021.

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