Latest IRS Updates on Employee Retention Credit: What Businesses Need to Know
On October 10, 2024, the IRS reported it is processing nearly 400,000 ERC claims, representing around $10 billion in eligible claims. Due to an influx of ERC claims driven by both eligible businesses and potentially ineligible claims spurred by aggressive promoters, the IRS is carefully examining each case to ensure compliance. IRS Commissioner Danny Werfel noted the agency’s commitment to both quick processing of legitimate claims and stringent scrutiny to prevent improper payments. For businesses that have yet to receive a decision on their ERC applications, the IRS continues to manage high claim volumes and is dedicated to processing payments efficiently and securely.
To streamline processing, the IRS recently introduced a consolidated claim process for third-party payers who often file ERC claims on behalf of multiple clients. This new process allows third-party payers to correct ineligible claims individually without impacting valid ones, which supports quicker resolution. Additionally, as part of its intensified audit efforts, the IRS is pursuing civil and criminal actions against fraudulent claims. Many improper claims resulted from misleading advertising tactics by some promoters, underscoring the importance of consulting qualified tax professionals.
For businesses seeking to correct ERC claims, the IRS’s ERC Voluntary Disclosure Program offers a path to voluntarily amend claims and resolve any issues by November 22, 2024. Participating businesses benefit from a 15% discount on repayments, avoiding future penalties, interest, and potential audits. This program provides an opportunity for clients who may have received ERC payments by mistake to self-correct without further financial impact. Additionally, the ERC Withdrawal Program remains open for businesses with pending claims that wish to voluntarily withdraw.
Given the continued scrutiny of ERC claims, the IRS encourages businesses to carefully review eligibility criteria, utilize the IRS ERC Eligibility Checklist for guidance, and avoid promoters who market the ERC as a “grant” or “stimulus payment,” as these labels often signal misleading practices. Consulting with trusted tax professionals, like our team at Strategic Tax Planning, is the best way to confirm eligibility and ensure compliance.
If your business has received a disallowance notice from the IRS due to intensified audits and you would like a second-opinion review of your ERC claim, please reach out to our team. Our experts can carefully review your ERC claim to confirm its eligibility and compliance with IRS requirements, offering clarity and strategic options for addressing disallowed claims.
At Strategic Tax Planning, we are here to guide clients through every phase of the ERC process, from eligibility assessments to claim submissions and resolution. We recommend reaching out with any questions about ERC eligibility, the IRS’s recent compliance initiatives, or disallowance notices.
If you need assistance with the ERC Voluntary Disclosure Program, navigating a claim withdrawal, or understanding your eligibility status, contact us. Our team is prepared to help you take advantage of these options while avoiding potential compliance pitfalls. If you have any questions or concerns about your ERC claim then please reach out to our team at (202) 455-6010 or schedule a confidential consultation
Stay tuned for more updates from Strategic Tax Planning, and thank you for trusting us as your resource for all tax-related needs.
