Client Advisory: ERTC Moratorium

September 15, 2023


By Evelyn A. Haralampu, Partner

Because of the large number of inappropriate claims for the Employee Retention Tax Credit (ERTC), the IRS has stopped receiving applications for those credits beginning on September 14, 2023. The moratorium will continue at least until year-end 2023 and may be extended beyond that.

The IRS processing time for credit applications has increased from 90 to 180 days, and longer for cases that have been singled out for audit.  

The IRS has been closely tracking the large number of inappropriate tax refund claims that have been filed under the ERTC program. The ERTC grants certain employers refund credits of up to $26,000 per employee. Promoters that emerged when the ERTC was passed into law have sought to profit from fraudulent claims by encouraging ineligible small business clients to apply for credit and taking a portion of the credit as payment. This practice is so widespread that the IRS has added ERTC claims to its Dirty Dozen list of tax scams. In addition, it has prosecuted some of the promoters for tax fraud and has now imposed a moratorium on filing new claims for the credit.

The IRS has referred thousands of ERTC cases for audit. IRS is allowing some employers who think they may have received a refund improperly to repay it. Ineligible employers who have claimed the credit may be able to withdraw their claim applications before the IRS takes action.

Concerned employers who may have filed ERTC claims with the IRS should review those claims with a trusted advisor and decide whether the claim should be withdrawn or kept at the IRS for review. Employers seeking to file a claim for the credit after the moratorium is lifted should engage a trusted advisor to ensure they meet the credit eligibility requirements.

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