The Internal Revenue Service (IRS) has recently announced significant updates to the Employee Retention Credit (ERC) program, which is vital for all businesses that have claimed or are considering claiming the credit. Here’s what you need to know:

Lifting of the ERC Moratorium and Accelerated Payments

In a move that balances enforcement of fraudulent claims while acknowledging legitimate claimants, on August 8, 2024, the IRS lifted the September 14, 2023, moratorium on ERC claims, originally imposed to allow for a thorough review of the program. Here’s what you can expect:

• Processing of Low-Risk Claims: The IRS has identified 50,000 low-risk ERC claims and is moving them into payment processing. These payments are expected to begin in September 2024, with more payments to additional claimants later this fall.
• Processing Claims Filed After September 14, 2023: The IRS will now begin processing claims submitted between September 14, 2023, and January 31, 2024, focusing on those identified as highest or lowest risk. This selective approach aims to expedite legitimate payments while preventing improper claims.

The great news for our clients is that our ERC filings fall within the above categories of filers as low-risk claims that can expect immediate processing.

Ongoing Compliance Work and the Voluntary Disclosure Program

Because the IRS continues to analyze and audit ERC claims to ensure compliance. Businesses that did not utilize abip to determine qualification for ERC claims should be mindful that the IRS has re-opened the Voluntary Disclosure Program until November 22, 2024. This program cycle is focused on claims made for payroll for the 2021 Tax Period. Key requirements to consider:

• Taxpayer must complete and send an application package for the second ERC Voluntary Disclosure Program;
• Taxpayer must voluntarily agree to pay back 85% of the ERC claimed; 
• Cooperate with any requests from the IRS for more information; and
• Sign a closing agreement.

What This Means for Your Business

• Ensure address information with the IRS is up to date and be on the lookout for payment from the IRS in the next 90 days. Many of our client’s claims for ERC were filed between late 2021 and 2022 and based on recent communications with the IRS Tax Practitioner’s hotline, those claims should be at the top of the list for processing.
• Review Your Claims: If your business has claimed the ERC and did not work with us, it is essential to ensure that your claims are accurate and comply with the IRS’s regulations. The ongoing audits and investigations mean that improper claims could result in penalties or criminal charges.
• Stay Informed and Compliant: It is more important than ever to stay informed about the latest developments and ensure your business is compliant with all applicable rules and regulations.

Our team is here to help you navigate these changes, review your claims, and ensure your business remains in good standing with the IRS. Please don’t hesitate to reach out with any questions or concerns.