The IRS is signaling new progress on the agency’s efforts to process Employee Retention Credit claims and identify fraudulent applications.

It comes as federal lawmakers are putting pressure on the agency, examining the challenges businesses and tax preparers have faced with ERC.

During the IRS Nationwide Tax Forum at the end of July, commissioner Danny Werfel said the agency has shifted its efforts to increased scrutiny on false claims after successfully clearing the backlog of valid claims.

The ERC program was designed as a refundable tax credit to help businesses who continued to pay employees during the pandemic despite shutdowns.

The period of eligibility for those businesses impacted is between March 13, 2020 and Dec. 31, 2021.

Claims Process

The IRS received more than 2.5 million claims since the program was enacted, but with the complexity of the claims, growing falsities made timely processing difficult.

Current law gives businesses until April 15, 2025 to file claims for the credit, a future date Werfel said is concerning.

“The further we get from the pandemic, we believe the percentage of legitimate claims coming in is declining,” said Werfel.

“Instead, we continue to see more and more questionable claims coming in following the onslaught of misleading marketing from promoters pushing businesses to apply.”

Future Unknown

The IRS has issued a number of warnings over the past year as false claims have risen significantly.

Officials said aggressive marketers are...

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