IRS to Begin Processing Older ERC Claims

The IRS intends to gradually pay out older claims for the Employee Retention Credit (ERC) this summer, while continuing to reject improper high-risk claims. Processing of new ERC claims was paused last September due to a surge in questionable claims. Upon review, the IRS discovered that 10% to 20% of claims in the highest-risk category were erroneous, resulting in tens of thousands of claims being denied. The IRS will also scrutinize claims with risk indicators to gather more information and enhance compliance reviews.

Commissioner Danny Werfel assured that legitimate claims will be processed, with the first payments for low-risk claims expected this summer. Claims submitted after September 14, 2023, will not be processed. Werfel advised taxpayers to wait for further updates and avoid calling the agency. Additionally, the IRS is seeking an extension of the statute of limitations to address improper claims.

Compliance efforts have identified over $2 billion in erroneous ERC claims, and the IRS Criminal Investigation unit has initiated 450 criminal cases related to potentially fraudulent claims totaling nearly $7 billion.

If you would like to read more, check out CPA Practice Advisor’s article here.