Last Updated on September 15, 2023 by Robert C. Hoopes
IRS Commissioner Danny Werfel has taken a decisive step to protect businesses and maintain the integrity of the small business tax break created during the Covid-19 pandemic. Werfel has ordered a temporary halt to the processing of new claims for the employee retention credit (ERC) due to a surge in questionable claims.
The ERC is a tax break that can be worth thousands of dollars per employee, making it an alluring target for aggressive promoters who falsely promise businesses that they qualify for the credit. This influx of dubious claims has caused delays in processing legitimate claims and other vital tax matters.
Werfel emphasized that the ERC was not intended to be a “gravy train” for promoters, and the processing pause is necessary to protect filers and ensure the program’s integrity. The halt will remain in effect until at least the end of 2023, and existing claims may experience longer processing times, stretching from the standard goal of 90 days to 180 days or more.
Lawmakers have also taken notice of the situation and are now scrutinizing the small business tax break. They believe that stricter oversight is required to prevent fraudulent claims and protect businesses from falling victim to false promises.
In light of these developments, businesses who believe they qualify for the ERC are urged to consult with a tax professional or trusted advisor to ensure their eligibility. This will help them avoid falling prey to the schemes of aggressive promoters and ensure that they receive the credit they legitimately deserve.
The temporary halt on processing new claims for the ERC serves as a reminder that caution and due diligence are necessary when dealing with tax breaks. While the halt may cause inconvenience for some businesses, it is a necessary step to safeguard the integrity of the program and protect businesses from potential harm.