Understanding the IRS Moratorium on ERC Claims

The IRS has announced it will stop processing new Employee Retention Credit (or ERC) claims. But why has it ordered this moratorium? And how will it impact existing claims? 

The knowledgeable attorneys at The Frazer Firm are here to provide you with all the information you need to know!  

What is the ERC Moratorium? 

The IRS says ERC claims filed after September 14th (the date it announced the moratorium) will not be processed before the end of 2023. It reserved the right to extend this pause if necessary. 

Why Was the Moratorium Ordered? 

The IRS ordered the moratorium because of concerns within the agency that a substantial share of ERC claims are ineligible – and that those claims are increasingly putting businesses at risk of being scammed by aggressive promoters. 

In the announcement, IRS Commissioner Danny Werfel said, “The IRS is increasingly alarmed about honest small business owners being scammed by unscrupulous actors, and we could no longer tolerate growing evidence of questionable claims pouring in.” 

How Will the Moratorium Impact Existing ERC Claims? 

The IRS says it will continue to process ERC claims filed before the September 14th cutoff date. However, those applications will be handled with an increased level of scrutiny. 

As a result, employers will need to wait longer to receive their payouts. The IRS is increasing its standard processing goal from 90 days to 180 days. 

The agency also says it may reach out to applicants to seek additional documentation to ensure their claims are legitimate. In cases where this occurs, the processing period will extend beyond the 180-day target. 

Two New ERC Initiatives 

As part of its moratorium announcement, the IRS also revealed it’s launching two new initiatives to help businesses who found themselves victims of aggressive promoters. They are: 

1. A Settlement Program: This program will make it easier for companies that received an improper ERC payment to repay the IRS. 

1. A Withdrawal Option: This option will permit businesses that have pending applications to withdraw their claims and avoid potential repayment issues and promoter fees. 

The IRS says it will release further details about these initiatives in the coming months. 

Florida Business Lawyers You Can Count On 

If you have more questions about the ERC moratorium or the IRS’s new initiatives, please reach out to the skilled business attorneys at The Frazer Firm in Jupiter, Florida.

We’ve been helping Florida companies protect their businesses for years, and we would be happy to speak with you to see how we can help do the same for you!