In a recent move, the Internal Revenue Service (IRS) imposed a moratorium on new Employee Retention Credit (ERC) claims processing. This decision, announced on September 14, 2023, follows a surge in questionable claim submissions that led to this temporary hiatus. IRS has pointed towards due diligence and detailed compliance reviews as the major factors causing slowdowns in processing the existing claims.
As per IRS guidelines, the Employee Retention Credit is designed to encourage businesses to keep employees on their payroll during a period of business slowdown or stoppage due to the COVID-19 pandemic. However, the recent surge in dubious claims has raised concerns about possible misuse.
The IRS’s announcement does not preclude the processing of claims already submitted but warns of likely slowdowns in processing times. The administrative body has not disclosed a timeline for when the processing of new claims would resume. It remains to be seen how this decision will impact businesses relying on ERC for their continuity.
This news points towards the IRS’s more assertive attitude towards enforcing compliance, which has some relevant implications for businesses and legal professionals dealing with taxation matters. The detailed investigative approach suggests that companies should be prepared for longer processing times, and perhaps more importantly, a higher degree of scrutiny regarding compliance with tax-related regulations.
The full details of the statement can be found at the original JD Supra article.