IRS Updates on ERTC Claims: Key Actions and What They Mean for Your Business
The IRS has recently provided crucial updates regarding the Employee Retention Credit (ERC) program, offering both relief and caution to businesses across the country. As Boston Growth Partners continues to support businesses navigating the complexities of ERC claims, we want to ensure you're informed about these significant developments and how they might affect your claim.
Key Updates from the IRS
On August 8, 2024, the IRS announced a series of actions aimed at expediting valid ERC claims while intensifying efforts to prevent and address improper claims. Here’s a breakdown of the most important points from this announcement:
Acceleration of Valid Claims: The IRS is moving forward with processing 50,000 ERC claims that have been identified as low-risk. These claims are expected to begin receiving payments in September, with more claims moving into the processing pipeline throughout the fall. This is a positive step for businesses that have been waiting for their ERC payments, especially those whose claims have been stalled due to the extensive review process.
Disallowance of Improper Claims: The IRS has issued 28,000 disallowance letters to businesses whose claims were deemed high-risk or potentially improper. This action is estimated to prevent up to $5 billion in improper payments. While this crackdown aims to protect taxpayer funds, it also means that many businesses will need to carefully review their disallowed claims and consider their options for appeal.
Continued Compliance and Investigations: The IRS is ramping up its compliance efforts, including audits, civil and criminal investigations, and actions against promoters who have improperly marketed the ERC. To date, the IRS has initiated 460 criminal cases related to potentially fraudulent ERC claims, with significant resources being directed toward identifying and prosecuting those involved in such activities.
Appeal Process for Denied Claims: Businesses that receive a denial notice for their ERC claim have the right to file an administrative appeal. The IRS has acknowledged that some recent disallowance letters may have omitted information about the appeals process, and they are taking steps to ensure that all affected taxpayers are properly informed. If you’ve received a denial, it’s crucial to understand your rights and the steps you can take to appeal the decision.
ERC Claim Withdrawal and Voluntary Disclosure Programs: The IRS highlighted the success of its ERC Claim Withdrawal Program, which has seen over 7,300 entities withdraw nearly $677 million in claims. Additionally, the Voluntary Disclosure Program, which ended in March, resulted in the disclosure of $1.09 billion worth of credits by more than 2,600 ERC recipients. These programs demonstrate the IRS’s commitment to addressing improper claims while offering businesses a path to correct mistakes.
What This Means for Your Business
The IRS’s latest actions signal both progress and caution for businesses involved in the ERC program. Here’s what you need to keep in mind:
If You’ve Filed a Valid Claim: If your claim has been deemed low-risk, you may soon receive your payment. However, be prepared for the possibility that only certain tax periods may be paid out initially, as the IRS continues to review eligibility for other periods.
If Your Claim Was Disallowed: Don’t panic. Review the denial carefully and consider filing an appeal if you believe the disallowance was made in error. The appeal process is your opportunity to present additional documentation or clarify any misunderstandings.
Stay Vigilant Against Misleading Promotions: The IRS continues to target promoters who have misrepresented the ERC program. Be wary of any claims that seem too good to be true or that promise easy approvals without thorough documentation.
Prepare for Possible Audits: With thousands of ERC claims currently under audit, it’s important to ensure that all your records are in order. If your claim is selected for audit, having organized and comprehensive documentation will be key to a smooth process.
Moving Forward
At Boston Growth Partners, we are committed to helping businesses navigate the complex landscape of ERC claims. Whether you need assistance with a new claim, a denied claim, or an audit, our team is here to provide expert guidance and support.
As the IRS continues its work on the ERC program, staying informed and prepared is more important than ever. If you have any questions or concerns about your ERC claim, don’t hesitate to reach out to us. We’re here to help you through every step of the process.