Please note: As of 12:00 am PDT on April 9, 2024, we are no longer accepting applications for tax year 2020. Any completed applications (with supporting documentation) submitted on or after 12:00 am PDT on April 9, 2024, will be prepared and filed for tax year 2021 only. By continuing to utilize our service, you acknowledge and agree that SmartERC will not prepare nor file your Forms 941X for any quarter of tax year 2020.

ERC Suspended: What You Need to Know About the IRS Moratorium

ERC suspension key events

January 2, 2024

ERC Suspended: Facts About The IRS Moratorium

The IRS’s recent announcement of a temporary halt to the processing of new Employee Retention Credit (ERC) claims is a testament to the problematic surge in questionable ERC claims. This measure is designed to protect taxpayers from scams and to give the IRS time to address concerns raised by tax professionals. 

As someone who worked as a IRS Revenue Agent for 13 years, I’m familiar with the challenges people face when navigating the tax system. These difficulties are compounded due to misleading claims from unqualified promoters and false tax strategies posted on social and traditional media. The ERC is one of the largest and most valuable tax credit programs of the last century. For that reason, the ERC has become a hotbed of these exploitative practices for bad actors seeking to cash in on this once in a lifetime opportunity. 

These practices don’t merely place individual businesses at risk – they threaten the integrity of our tax system. In this article, I’ll draw from my experience working at the IRS to shed light on this crucial issue. By sharing insights from my firsthand knowledge and understanding of the published IRS guidance, I hope to provide eligible business owners with understanding so they can navigate the IRS moratorium with confidence.

What Does the IRS Moratorium Mean for Eligible Business Owners?

According to the September 14, 2023 IRS News Release IR-2023-169, the current moratorium on processing new ERC claims is expected to last until at least December 31. The good news is that, during the moratorium, processing for existing ERC claims will continue but at a slower pace due to increased compliance reviews.

This measure will give the IRS time to implement additional safeguards to prevent abuse and protect businesses from predatory tactics. The IRS and the Department of Justice are actively working together to tackle fraud, with a special focus on questionable claims including, but not limited to: claims filed by companies established after 2022, claims filed by companies that have never filed payroll returns, and claims filed by newly formed ERC promoters that only file ERC claims.

The standard processing goal for ERC claims has also been extended from 90 days to 180 days, and may take longer if further reviews or audits are required. Some businesses may also need to provide additional documentation to validate their claims.

What Actions is the IRS Taking to Combat Fraudulent Claims?

The IRS Commissioner, Danny Werfel, emphasized that stricter compliance reviews are necessary to shield honest small businesses from scams and to protect them from penalties or interest payments resulting from fraudulent claims. Such businesses may have filed claims with promoters that, for example, did not ask any questions about the business before “qualifying” the business for the ERC, did not ask how many employees the business had in 2019, or did not ask about things like revenue declines or operational shutdowns.

For businesses who believe they may have an improper ERC claim and have cashed or deposited their refund checks, the IRS is developing a settlement program for repayments. More details about this program and a special withdrawal option for unprocessed claims will be available soon. However, taxpayers must understand that withdrawing a fraudulent claim will not exempt them from potential criminal investigation and prosecution.

The IRS is committed to helping businesses navigate these changes and encourages taxpayers to consult IRS guidance and tools to determine ERC eligibility.  

ERC Suspension Timeline

Can I Still Claim the ERC During the IRS Moratorium?

Yes, even during the IRS moratorium, eligible businesses can still file for the ERC. However, it’s essential to understand the intricacies of the process to avoid potential errors and to review that your claim is legitimate and compliant. Here’s how we can assist you with each step:

  1. Establish your eligibility with our guidance: We’ll help determine if your business qualifies for the ERC based on government shutdown orders or a decline in gross receipts.
  2. Prepare necessary documentation with our support: Our team will assist you in gathering and organizing all the required documentation to support your claims. It’s crucial that you have the necessary records documented to validate your eligibility and credit calculation.
  3. File your claim with our assistance: We will guide you through the process of claiming the ERC by accurately reporting your total qualified wages and related health plan expenses.

At Smart ERC, we leverage our credentialed knowledge of the tax system and our expertise as former IRS auditors to process your claim under IRS guidelines. We provide comprehensive support at every step, from determining your eligibility to preparing your documentation for a potential audit to filing your claim.

Our commitment to integrity, and our proactive approach towards reviewing changes in IRS regulations, allow us to help our clients confidently navigate the ERC process during the IRS moratorium.

Advice for Taxpayers Facing Doubtful ERC Claims

Given the upsurge in ineligible ERC claims, the IRS is making concerted efforts to protect businesses. As a taxpayer, safeguarding your interests against potential scams is paramount. Drawing from my experience as an IRS auditor, I recommend a three-pronged approach to this issue:

  1. Verify Eligibility: We encourage our clients to meticulously go through the IRS eligibility criteria while claiming ERC.
  2. Maintain Proper Documentation: We advise our clients to keep a detailed record of all expenses and necessary documents to validate the ERC claim. This process aids in supporting your claim during an audit or review.
  3. Avoid Engagement with Untrustworthy Marketers: Multi-dimensional vetting is recommended for any tax professional or service provider before engagement. We caution our clients against falling prey to fraudulent schemes or unqualified tax consultants claiming to assist in ERC.

Why Trust Smart ERC with Your ERC claim?

In my years of experience in tax accounting, I’ve seen how ineligible applicants can undermine the integrity of our tax system and pose significant risks to individual businesses. In navigating these uncertain times, Smart ERC stands as your trusted partner

For two decades, our network of former IRS Auditors have helped businesses navigate complex government programs like the ERC. We offer a free in-house preemptive review to check that your ERC claim complies with the current IRS notices and guidelines. 

When the IRS resumes processing, our expert team will handle all aspects of your ERC claim, providing you with a service that exceeds and fulfills Forbes’ extensive criteria for selecting an ERC professional:

  1. Thorough documentation demonstrating your ERC eligibility
  2. Comprehensive government order research to support your claim
  3. Over two decades of experience and thousands of satisfied clients
  4. No upfront fee to see if you qualify

When you partner with Smart ERC, you also gain the added benefit of an optional ERC audit defense for the peace of mind you deserve. With our team at Smart ERC on your side, you can be confident that your claim is in good hands.

Having served as an IRS Auditor for over 13 years, I have acquired a deep understanding of the tax-related challenges that business owners encounter. My primary goal is to ensure that we deliver accurate and dependable information. We aim to provide you with peace of mind as we expertly guide you through the entire process.”

– Alejandra Astudillo, Former IRS Auditor

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