In a surprising move, the Internal Revenue Service (IRS) has announced an immediate halt on the processing of new employee retention credit (ERC) claims. This moratorium, as indicated in the IRS News Release IR-2023-169, will remain in effect until at least December 31, 2023. This action comes as a critical response to aggressive promoters and marketers who, according to the IRS, are “hustling to get a hefty contingency fee.”
For those unfamiliar, the employee retention credit is a refundable tax credit designed to encourage employers to keep employees on their payroll during periods of business hardship. It is an important tool for businesses, especially during uncertain economic times.
The IRS’s decision to halt new ERC claims marks a pivotal shift in its approach towards this credit and raises numerous questions for corporations and employers regarding their future ability to claim this credit. What does this mean for businesses? And how might this impact the overall economic recovery?
In the interim, all businesses and legal professionals dealing with ERC matters should be aware of this development and plan accordingly. Those who have been aggressively promoting or marketing the ERC may need to change their approach or face repercussions from the IRS. More updates to follow on the impact and developments surrounding the IRS’s recent moratorium on ERC claims.