Craig Pisaris-Henderson’s Post

If you are one of the 1.4 million SMBs waiting for your ERC tax refund, here is a good read: In an effort to provide ‘facts' versus ‘perception,’ Economic Recovery Center worked with several legal and tax firms to break down the real numbers behind the ERTC program (see statistics below). We’ve also broken down the data from a recent IRS update regarding processing Employee Retention Tax Credit (ERTC) submissions and their ongoing challenges. IRS Update As you may be aware, the IRS enacted an internal IRS moratorium on processing 'newly submitted’ ERTC claims on September 14, 2023. Their stated intent was to refine and focus on processing the large number of claims received before the moratorium was enacted. Unfortunately, the IRS did not allocate its resources appropriately. Instead of providing the IRS time to catch up, the moratorium has resulted in significantly increased processing times for claims - even for those submitted before the moratorium. This past week, the IRS announced that they anticipate ‘some' of the first payments to go out later this summer. However, they emphasized their structural challenges and that processing claims moving forward will be slower than during the pandemic. They further stated that the oldest ‘pre-moratorium’ claims would be processed first while making no comment when claims submitted after the moratorium would be processed. While the IRS initially stated the moratorium would be lifted at the end of 2023, they later moved the date to late spring. It is now summer, and the moratorium on processing newly filed claims remains in effect with no new end date mentioned. Due to these extended processing times and perceived ‘delay tactics,’ SMBs and their legal firms have begun to take action against the IRS for claims that have been outstanding for more than six months (the IRS’ initial timeline). This is placing pressure on the IRS as the lawsuits are showing the delays SMBs are experiencing are due to the IRS’ lack of processing and not due to fraud or an overabundance of claims being filed. In The Weeks to Come In an attempt to reduce its workload, the IRS announced it would be sending notices in the coming weeks to claims identified as “potentially high-risk.” While the IRS has not stated what is considered a ‘potential high-risk’ claim, we believe they will be using liberal definitions/ assumptions to cast the widest net possible, which will include thousands, if not hundreds of thousands, of letters being generated regardless of the true validity of the claims.