Increasingly, tax attorneys and other practitioners assisting employers with employee retention credit (ERC) claims are picking up on intensifying undertones of delay and ad hoc guidance from the IRS. Some unofficial sources are even reporting an existing moratorium on ERC claim processing now through September 2023 until the IRS can issue additional guidance and/or implement a voluntary disclosure program of sorts for those who wrongly claimed the pandemic-era tax credit. Of course, none of this should be too surprising considering the summer’s deluge of IRS warnings and statements of concern regarding “dubious submissions” and the belief that “the percentage of legitimate claims coming in is declining.”1
Unfortunately, the IRS’s timing is less than ideal considering how the nation is experiencing renewed COVID surge warnings and the fact that many businesses are still reeling from the worst of the pandemic periods. Even without a mortarium, the current IRS backlog of ERC claims, in conjunction with a renewed COVID surge, could push a teetering business off the edge and past the point of no return.
Although no official announcement of a moratorium has been made, we suspect it is the reason for the longer than usual ERC turnaround time that clients are enduring. Many of these taxpayers filed over a year ago and still have not received their refunds. As for whether the IRS is weighing new guidance or planning to implement a voluntary disclosure program for those who wrongly claimed the tax relief, we will follow any developments closely and keep our readers apprised of breaking news.
1. IR-2023-135 (July 26, 2023).