The IRS Has Stopped Processing New ERC Claims. What Does This Mean for Your Business?

Earlier this year, the IRS announced that it was devoting additional resources to scrutinizing businesses’ Employee Retention Credit (ERC) claims. On September 14, 2023, it went a step further, announcing that it would stop processing new ERC claims as it focuses on uncovering and prosecuting ERC fraud.

The IRS’ latest announcement is the result of confirmed widespread fraud under the program. While the IRS points the finger primarily at “aggressive promoters and marketing” that targeted small business owners unaware of the ERC’s eligibility criteria, it is targeting businesses (and business owners) as well. Audits focused on businesses’ ERC claims remain common, and IRS Criminal Investigation (IRS CI) is conducting criminal tax fraud investigations in many cases.  

What Do Business Owners in New Jersey Need to Know About the ERC?

With this in mind, what do business owners in New Jersey need to know about the ERC? New Jersey federal tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group, explains:

1. If Your Business Hasn’t Yet Filed for the ERC

While the ERC was a pandemic-era economic relief program offered in 2020 and 2021, eligible businesses that didn’t claim the credit during these tax years could do so retroactively. However, the IRS stopped accepting new filings on September 14. According to the IRS’ News Release, it anticipates that the moratorium will remain in place “through at least the end of the year.” As a result, even if your business is eligible for the ERC, if you haven’t filed, you won’t be able to do so until the moratorium is lifted.

2. If Your Business Has an ERC Claim Pending  

If your business has an ERC claim pending that was filed before September 14, it will still be processed. However, the IRS warns that processing could take significantly longer than it has in the past, with standard processing going from 90 to 180 days. It also notes that pending claims will face “detailed compliance reviews” and that it may request additional documentation to ensure the legitimacy of all ERC claims.

The IRS further warns that processing could take “much longer if [a] claim faces further review or audit.” With the IRS (and IRS CI) focused on uncovering and prosecuting ERC fraud, business owners with concerns about their pending filings should promptly consult with experienced tax counsel.

3. If Your Business Received the ERC

Similarly, if your business has already received an Employee Retention Credit, you may want to consult with tax counsel as well. The IRS is reviewing processed claims in addition to pending claims, and it is initiating audits and investigations when warranted. These inquiries can present substantial risks for businesses (and their owners), and for those who are not yet facing scrutiny, a proactive approach is likely the best option for avoiding unnecessary consequences.  

Request a Confidential Consultation with New Jersey Federal Tax Lawyer Kevin E. Thorn

To learn more about the risks of submitting a fraudulent ERC claim to the IRS, contact Thorn Law Group today. Call 201-842-7696 or request a confidential consultation online to schedule an appointment as soon as possible.