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AmiSight 7/17: Employee Retention Claims Filed since September Are Still on Hold by IRS

Writer's picture: Ami KassarAmi Kassar

In a delicate balance to prevent further fraud and help those who legitimately need it, the IRS is maintaining a moratorium on employee retention tax credit (ERC) claims filed since mid-September 2023.

 

The credit was created by Congress in 2020 to encourage employers to keep workers on their payrolls during the pandemic. Since then, the program has cost the government roughly $230 billion, about triple the early projections. Although the credit expired in 2021, employers can still file amended tax returns to claim up to $21,000 per employee for tax year 2021.

 

The WSJ reports that the backlog of unprocessed ERC claims had swelled to 1.4 million by mid-May, including 880,000 filed before the moratorium, according to a June court filing. Since the moratorium started, the IRS said it had processed 28,000 claims totaling $2.2 billion and disallowed more than 14,000 claims worth more than $1 billion.

 

While the rise of pop-up firms and promoters has resulted in a rash of questionable claims since the emergency phase ended, there are still legitimate claims among the 1 million-plus pending claims. Commissioner Danny Werfel said the IRS can’t safely end the moratorium unless Congress passes legislation to set the cutoff date for new claims filed after January 31, 2024, which the House voted for in January but has stalled in the Senate.


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