IRS Announces Stop to Processing Employee Retention Credit (ERC) Refund Claims

IRS Announces Stop to Processing Employee Retention Credit (ERC) Refund Claims 

The Internal Revenue Service (IRS), in a news release (IR-2023-169) issued Sept. 14, 2023, announced an immediate stop to processing newly received ERC refund claims. The moratorium is initially scheduled to last through Dec. 31, 2023. According to the IRS, many of the recently received claims may not be valid and have stemmed from aggressive promotors marketing the credit to taxpayers who are not eligible. The pause will allow time to add more safeguards to prevent future abuse and protect businesses and the tax system, the release states. 

Previously filed claims in process (approximately 637,000) will continue to be processed under a more enhanced compliance review, which increased the standard processing goal from 90 days to 180 days. This will allow more time for review and may include requesting additional information from taxpayers to support claims. 

The news release provides guidance for the following groups of taxpayers: 

Currently awaiting an ERC refund claim 

Expect a longer timeframe as the IRS more closely reviews the claims in process. You may be contacted for additional information regarding pending claims. 

Haven’t filed a claim yet 

Carefully review the existing guidelines to be sure your situation is eligible for the credit. Review the new question and answer guide and consider waiting to file any claims until after the moratorium expires in case more guidance is issued. 

Already filed and concerned about eligibility  

If a taxpayer now believes that any claims submitted earlier that have not been processed or paid were submitted improperly, they can withdraw the claim even if the case is already under audit or awaiting audit.  The IRS will provide more details on how this will work soon. 

Already received a refund that taxpayer believes is in error 

The IRS will provide details later this fall on a settlement program that will allow taxpayers to repay ERC claims and avoid penalties and future compliance action. 

We are continuously monitoring this situation and will follow up as any new information becomes available. 

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The information contained in this article is for informative purposes only and should not be relied on when making any business, legal, or other decisions. This information may be updated without notice and/or may not contain the most current information that is available related to this topic. Please consult with your advisor to determine how this information applies to your specific facts and circumstances.