On October 3, 2023, GOP lawmakers blasted the moratorium on the employee retention credit (ERC). Ways and Means Committee Chair Jason Smith and Subcommittee on Oversight Chair David Schweikert wrote to Commissioner Werfel, criticizing the IRS’s decision to halt new ERC claims’ processing. Although the lawmakers expressed appreciation for IRS efforts to protect against fraud, they clarified that “predatory practices cannot be the only reason for the years-long backlog of delivering refunds to eligible businesses, many of which have suffered financial harm while in processing limbo.”
The lawmakers continued by shifting blame to the IRS itself for “[fostering] an environment ripe for fraudsters,” specifying the repeated changes to ERC guidance and poor communication with frustrated applicants. Moreover, besides emphasizing that the “the announced moratorium will exacerbate wait times, worsen existing backlog of claims, and prevent taxpayers with legitimate claims from receiving payments,” they outright accused the IRS of claiming a “false victory over a backlog that has not been resolved” in an IRS statement made September 5, 2023.
Significantly, the lawmakers demanded answers to a list of 10 hard-hitting questions, no later than October 17, 2023:
While we wait for an IRS response, if you are just learning about ERC or have a pending claim that needs a second look, make sure you have an experienced tax professional involved throughout the process.