IRS Cracks Down on Fraudulent ERC Claims

The IRS Commissioner ordered an immediate stop on the processing of new employee retention credit (ERC) claims yesterday. The decision is the result of what the agency calls a “surge of questionable claims” for the CARES Act benefit.

To ensure ERC funds go only to the businesses that deserve them, the IRS will be putting a pause on new claims through at least December 31, 2023. Previously filed claims will be processed but under a more stringent review process that will increase the expected processing time from 90 to 180 days.

A key takeaway from the commissioner’s announcement was his advice to work only with trusted tax professionals to protect your business from scammers and fraudulent claims that could put your business at risk.

What does this mean for you and your business?

If you have already filed a claim but have not yet received your credit:

  • Rest assured that your claim is still being processed, as this moratorium only affects new claims
  • Expect a more detailed review and longer length of time before your claim is processed

If you have not yet filed a claim:

  • Consult a qualified CPA and do not engage in conversations with unfamiliar solicitors
  • Prepare to file your claim now so that it is ready when the IRS resumes processing. (This is particularly important for 2020 claims that are due by April 15, 2024.)
  • Carefully evaluate your eligibility qualifications before filing.

Visit Grassi’s Employee Retention Credit page for the latest guidance on ERC eligibility for 2020 and 2021 wages. For a complimentary consultation on your business’s eligibility, please reach out to your Grassi advisor or contact Matthew McCullough or Michelle Schneider, Principals in Grassi’s Tax Credit & Incentives group.

Matthew McCullough Matthew McCullough, EA is a Tax Controversy Principal at Grassi. He works across a variety of industries including but not limited to Construction, Architecture & Engineering, Manufacturing & Distribution, Real Estate, and Not-For Profit. Matthew is proficient in tax audits for the IRS, New York State, New Jersey, Connecticut, California, Florida, Texas, and many others. His areas of specialty include sales tax audits, franchise... Read full bio

Michelle Schneider Michelle Schneider is a Tax Principal at Grassi. She has more than 15 years of experience in tax planning and compliance for a wide range of industries, including real estate, manufacturing & distribution, healthcare, logistics and construction. Michelle specializes in advising individuals, partnerships and corporations on multistate, consolidated filings and tiered partnership structure returns. Prior to joining Grassi, Michelle was a Tax Director for... Read full bio

Categories: Tax