Kulzer & DiPadova, P.A.
76 E. Euclid Avenue, Suite 300
Haddonfield, New Jersey 08033-2342

P: 856.795.7744
F: 856.795.8982
E: info@kulzerdipadova.com

News, Articles & Resources

Employee Retention Credit Update

Posted In:
Employee Retention Credit Update

Employee Retention Credit Update

Moratorium Status. Last September, the IRS announced a moratorium on processing new ERC claims.  At that time, the IRS was still working through a backlog of claims totaling around 700,000.  Initial hopes were that the IRS would clear this backlog in a matter of months.  Unfortunately, the IRS recently announced that, not only is it still working through its pre-moratorium backlog, but also – it has dramatically slowed processing times.  Prior to the moratorium, the IRS was processing around 40,000 claims per week.  That number has dropped to 1,000-2,000 per week.  Apparently, the IRS is now analyzing the merits of ERC claims before paying them.  Practitioners have reported the only clients who have received checks during this period were those whose claims were affirmatively reviewed and approved or cleared on audit.

A specific date for accepting new claims has not been announced yet, but the IRS stated it anticipates it will be sometime in the late spring.  The IRS currently has more than 1 million unprocessed ERC claims.

Voluntary Disclosure Program (VDP). The VDP, under which businesses that thought they had received an employee retention credit (ERC) in error were able to return eighty (80%) percent of their refund and keep the remaining funds, expired on March 22, 2024.  The IRS collected more than $225 million from over 500 taxpayers under the program.  Approximately 800 additional submissions remain unprocessed.

Claim Withdrawal Process (CWP). The CWP remains in effect for businesses which have not yet received or cashed a refund check.  As of this date, around 1,800 businesses have withdrawn over $251 million worth of claims.

Civil and Criminal Investigations. The IRS has assessed $572 million in audits of more than 12,000 businesses which filed over 22,000 improper claims.

As of Feb. 29, 2024, IRS Criminal Investigation had initiated more than 386 criminal cases, with claims totaling almost $3 billion. Twenty-five investigations resulted in federal charges with 12 convictions and six sentencings with an average sentence of 24 months.

ERC Filing Deadline.  The statute of limitations for ERC claims relating to quarters in the 2020 tax year expires on April 15, 2024.  However, on January 16, 2024, the Senate Finance and House Ways and Means Committees released a bipartisan bill, which included an early termination date for ERC claims of January 31, 2024.  While the bill has not been taken up by either Congressional body, the bill extends certain tax credits widely expected to be passed (such as the enhanced child tax credit) and the changes to the ERC are the only revenue raisers.

Sign Up For Our Newsletter

"*" indicates required fields