According to the IRS, a moratorium on processing of new ERC claims through year’s end will allow IRS to add more safeguards to prevent future abuse and to protect businesses from predatory tactics. The pandemic-era relief program is a refundable tax credit designed for businesses that continued paying employees during the COVID-19 crisis.

In a recent release, the IRS said there has been growing concern inside the tax agency and among tax professionals that many new claims are ineligible and increasingly putting businesses at financial risk, thanks to scams by aggressive promoters.

Already in the system?

The IRS emphasizes that payouts for these claims will continue during the moratorium period but at a slower pace due to the detailed compliance reviews. With the stricter compliance reviews in place during this period, existing ERC claims will go from a standard processing goal of 90 days to 180 days–and much longer if the claim faces further review or audit. The IRS may also seek additional documentation from the taxpayer to ensure it is a legitimate claim. In addition, the IRS will implement a program where taxpayers can withdraw a pending ERC claim or repay ERC amounts that they received but now believe were received in error. Details on these programs should be available soon. 

But if you’re being pressured right now to file, and not even sure you are eligible, take a step back. The IRS is advising business owners to “seek out a trusted tax professional who actually understands the complex ERC rules, not a promoter or marketer hustling to get a hefty contingency fee. Businesses that receive ERC payments improperly face the daunting prospect of paying those back, so we urge the utmost caution. The moratorium will help protect taxpayers by adding a new safety net onto this program to focus on fraudulent claims and scammers taking advantage of honest taxpayers.”

More details on the moratorium are available on the IRS site. Even more important, the IRS has posted easy-to-follow guidance on how to recognize and avoid promoters who don’t have your best interest at heart.