Employee Retention Credit Moratorium

Employee Retention Credit (ERC) Moratorium

October 30, 2023

Due to the continued efforts of aggressive promoters and fraudulent claims, on Sept. 14, 2023, the IRS announced a moratorium on processing Employee Retention Credit (“ERC”) claims through at least the end of 2023.

https://www.irs.gov/newsroom/to-protect-taxpayers-from-scams-irs-orders-immediate-stop-to-new-employee-retention-credit-processing-amid-surge-of-questionable-claims-concerns-from-tax-pros

Employers are eligible to claim the ERC if they paid employees during the COVID-19 pandemic AND had either (1) a full or partial suspension of operations due to governmental order, or (2) had a significant decline in gross receipts during 2020 or 2021. There are various additional elements that need to be considered when making a valid ERC claim, and the credit calculation can quickly become very complex. While many employers will have a valid claim to the ERC, there are many aggressive promoters encouraging employers to file a claim that they don’t qualify for or downplay the overall complexity of an ERC claim. It is a result of these aggressive promoters, and additional fraudulent claims, that have prompted the IRS to halt processing and develop a strategy for processing ERC claims going forward.

While the IRS has paused the processing of new claims, it doesn’t mean that new claims can’t be submitted. Our recommendation is that taxpayers with a valid claim should proceed with filing the claim as normal. Because of the moratorium imposed by the IRS the processing of new claims will take longer than normal, but all valid claims should be submitted and will eventually get processed. The filing deadline for 2020 ERC claims is April 15^th, 2024, and the filing deadline for 2021 ERC claims is April 15^th, 2025.

If you think you might qualify to claim the ERC or if you are being approached to claim the ERC by a third-party provider, we encourage you to reach out to your Larson professional for advice. In their recent memorandum, the IRS encouraged taxpayers to “seek out a trusted tax professional who actually understands the complex ERC rules, not a promoter or marketer hustling to get a hefty contingency fee.” Here at Larson & Company we have put the time in to understand the rules and what it takes to qualify for the ERC. We can be trusted to calculate an accurate credit claim and help your business receive the money it is entitled to.