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IRS Puts Brakes On ERC Claims Until 2024

Everything small businesses need to know about the IRS’s recent pause on ERC claims. Understand the reasons behind it and navigate the change.
Employee Retention Credit



The IRS has noticed a lot of doubtful and possibly false claims regarding the Employee Retention Credit (ERC). So, they’ve decided to stop taking new ERC claims for a while, starting from September 14. They’ll also look closer at the over 600,000 claims they already have.

Here’s a quick background on the ERC:

  • In 2020, Congress introduced the ERC to help businesses during the COVID-19 pandemic. This gave companies back money on their payroll taxes if they kept their employees.
  • Businesses can still submit claims from 2020 until April 15, 2024. For 2021, the deadline is April 15, 2025.
  • But because of this pause by the IRS, if you still need to submit your ERC claim, you’ll have to wait until at least January 2024.

Why the pause?

Some agencies have been pushing businesses to claim the maximum amount possible. They sometimes take a big chunk (up to 25%) of the claim value as their fee. The IRS has found that many of these claims are not right or even false. Almost 95% of recent claims might have problems.

What’s New from the IRS?

  • Settlement Program: If you received ERC money but think it was a mistake, there will be a way for you to return it. More details will come later.
  • Withdrawal Option: If you’ve sent in a claim that hasn’t been checked yet, you might have a chance to return it. But, if someone deliberately tried to trick the IRS, legal actions could still exist.

What Should Small Businesses Do?

  • If you have a claim waiting with the IRS, They’ll still look at it, but it will take longer because they are being extra careful.
  • If you are considering making a claim, Check all the rules thoroughly. If someone you don’t know offers to help, be careful. You don’t want any trouble with the IRS.
  • Talk to a tax expert if you’ve already sent a claim but are unsure about it. You might be able to take back your claim if there’s an issue.
  • If you’ve already received some ERC money but think it might be wrong, The IRS will soon share a way for businesses to settle and return this money without extra penalties.

The IRS is taking a break from new ERC claims due to a surge in doubtful submissions.

Small business owners should be cautious, especially if approached by unfamiliar agencies offering to help with claims.

If you need clarification on your claim or any ERC money you’ve received, it’s essential to consult a tax expert, like Notion CFO and Advisors. While the IRS offers ways to correct mistakes, the best approach is to ensure accuracy from the start. Stay informed, and prioritize integrity in all dealings.

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