ERC Claims Processing Revived

The IRS has finally resumed its payments on Employee Retention Credit claims – somewhat. Now buckle in, there is a lot going on here.

The agency put a hold on its processing because of the high number of fraudulent claims it was receiving. And this has not gone away as the IRS plans to deny tens of thousands of improper claims. It also still is not going to process newer claims as it is finding the vast majority of them to be fraudulent.

But there is good news!

Low-risk older returns will start to be processed again, so hopefully some businesses will start receiving these payments again in short time. The moratorium on processing any claims started back in September, so some people have been waiting on this for a while. And thankfully for some of those who have been waiting the longest, the oldest claims generally will be worked on first.

The breakdown of what the IRS is seeing fits a simple scheme. The agency is finding that between 10-20% of claims are in the highest risk group, meaning they are pretty clearly erroneous, and these are the ones that will start being denied. A different 10-20% of the claims are low risk and these are the ones that will start to be paid out again.

So that leaves a large middle 60-70% of claims sitting on ground where the IRS is going to do more investigation to determine the legitimacy of these claims. Will most of these end up paid out? Will most of these be denied? Will most of these receive something but not the full amount of their claim?

At this point the only answer we can give is a shrug.

I think it is important to remember that the moratorium on processing claims began because of a high percentage of fairly open scams. It was impossible to be a business and not receive multiple offers from various groups popping up out of nowhere saying that they can get you money if you let them process an ERC claim. These groups were not doing the proper due diligence to determine eligibility for the credit and even for those businesses that may have been actually eligible, they probably made a larger claim than was legal.

So if you completed your claim with a trusted advisor, at least now there is more hope that you will receive your payment – even if how long this will take is not completely clear. We can be thankful, however, that there is some forward momentum with this again.

Warmly,

Josh Bousquet
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