IRS Announces Updates on Status of Employee Retention Credit Claims

On August 8, 2024, the IRS released IR-2024-203 which provided various updates on the status of Employee Retention Credit (ERC) claims. The ERC was a pandemic-era relief measure, which gave affected businesses refundable payroll tax credits. The credit became the subject of abuse by unscrupulous promoters and, as a result, the IRS severely curbed the ERC program.

The recent IRS Announcement provided the following updates:

• The IRS has identified 50,000 valid claims for immediate payment. These payments are part of a low-risk group of claims. The payments are projected to start in September. The IRS is planning to target an additional block of claims in the low-risk group for processing in the Fall.
• The IRS sent out 28,000 disallowance letters for claims with a high risk of being incorrect. These claims total up to $5 billion in potentially improper payments. Tax professionals have raised concerns regarding potential errors in these disallowance letters. The IRS has indicated that over 90% of the notices were validly issued. IRS has initiated thousands of audits and 460 criminal cases.
• The IRS has ended the moratorium on claims filed between September 14, 2023 through January 31, 2024. Work will focus on the highest and lowest risk at the top and bottom end of the spectrum.
• The IRS reminds businesses that they may receive payments for certain periods while other periods are still being reviewed for eligibility. Eligibility can vary from period to period based on the applicability of a government shutdown order or an increase in the taxpayer’s gross receipts.
• The ERC Claim Withdrawal Program has led to 7,300 entities withdrawing $677 million of claims. The voluntary disclosure program resulted in 2,600 applications totaling $1.09 billion in claims.
• The IRS is gathering information about suspected abusive promoters and preparers improperly promoting the ability to claim ERC.

For more information on ERC claims and the latest IRS Announcement, please reach out to Marty Arking, Joseph Molloy, or your Anchin Relationship Partner.