The IRS has declared a moratorium on processing new Employee Retention Credit claims through the end of the year so they can stop businesses from falling victim to predatory operators encouraging businesses to file suspect claims. This has been widely reported . Of course this moratorium, which will run at least through December 31, 2023, means delays. The moratorium may last even longer into 2024.
The Employee Retention Credit is a complex credit to claim to begin with and potential scams have further muddied the waters. Claims filed before the moratorium are still being processed, although at a slower rate. An IRS release states. “The IRS continues to work previously filed Employee Retention Credit (ERC) claims received prior to the moratorium but renewed a reminder that increased fraud concerns means processing times will be longer.” That same release notes that payouts will also continue but at a slower pace. You may also have to provide additional documentation. In the meantime businesses can still look at the rules and determine if they are legitimately eligible for the credit. Even during the moratorium you can still file the appropriate forms or refile if you feel there have been errors ( form 940X).
The ERC was somewhat under used and had the potential to save jobs and help businesses. Like so many other attempts to help, scammers have taken advantage. Many promoters of these scams are aggressive with their advertising. These scams can put you and your business at risk. Make no mistake about that. Filing a false claim can have serious consequences–including penalties and interest. You might wind up losing money rather than gaining it. If you have already fallen victim to a scam the IRS is working on repayment plans.
The IRS Criminal Investigation department has been looking into numerous supect claims. So far they have uncovered over $8 billion in fraud and begun investigation into over 252 cases. Charges have been filed in 15 and four sentences have been handed down (an average of 21 months). Now they’ve turned their eyes to the ERC. According to the Washington Post article linked above (gifted) there have been 3.6 million ERC claims. That is a lot to sift through.
Keep in mind the ERC (you will see it abbreviated ERTC as well) is a great program. It offered struggling businesses a lifeline AND preserved jobs. Essentially businesses that kept employees on the payroll while operations were partly or fully suspended because of a government order or who saw significant decline in gross receipts during the period of eligibility could claim the tax credit.
The advertisements touting sure fire money at NO RISK were everywhere. It is always a good idea to be skeptical when you see the words “no risk.” Yet businesses pushed to the brink by difficult times may have looked for a silver lining. There is none, there are just the specific rules attached to the program. Find a reliable accountant. Obviously we would like you to talk to Hito LLC but more important is that your business goes with a reputable accounting firm and not a flashy social media advertisement.