Machen McChesney is committed to keeping you informed about critical developments that may impact your business. Today, we would like to bring to your attention an important update from the Internal Revenue Service (IRS) concerning the Employee Retention Credit (ERC) program.
Aggressive Marketing to Ineligible Applicants Highlights Unacceptable Risk According to the IRS
In recent months, the IRS has raised significant concerns regarding the surge in questionable ERC claims. Many of these claims are ineligible and pose a financial risk to businesses. This concerning trend has been fueled by aggressive marketing tactics employed by promoters and marketers. You have likely been and continue to be bombarded by these promoter letters, calls, emails, and texts.
To address this issue, the IRS has taken immediate action by imposing a moratorium on processing new ERC claims. This moratorium, effective September 14, 2023, will remain in place until at least December 31, 2023. The IRS has identified red flags related to aggressive marketing and questionable ERC claims. To be eligible for the ERC, businesses must meet specific criteria based on the pandemic's impact on their operations and finances.
What Does the Moratorium Mean for Your Business?
While valid ERC claims will continue to be paid out, they will undergo more thorough compliance reviews, resulting in extended processing times:
- Standard processing times for ERC claims will increase from 90 days to 180 days.
- Claims facing additional scrutiny or audit may experience even longer processing times.
- The IRS may request additional documentation to verify the legitimacy of your claim.
Protecting Your Business from Unscrupulous Promoters
At Machen McChesney, we understand the importance of safeguarding your business interests. We strongly advise that you take the IRS' precautions seriously if using an outside vendor to claim ERC:
- Pause and carefully assess your situation before considering an ERC claim from an outsider. Contact us first, as our firm can prepare valid ERC Claims!
- Seek guidance from our experienced team of tax professionals who possess a deep understanding of the ERC's intricate rules.
- Exercise caution when approached by promoters or marketers promising to secure your ERC funds in exchange for substantial contingency fees.
What You Can Do
As your dedicated accounting firm, we are here to guide you through these changes. Here are steps you can consider:
- For Those Awaiting an ERC Claim: Please be prepared for longer processing times and heightened compliance scrutiny. Unfortunately, individual claims cannot be expedited.
- For Those Considering Filing a Claim: We strongly recommend a careful review of the ERC guidelines. Consult with our team of experts to determine your eligibility using the new question-and-answer guide.
- Withdraw an Existing Claim: If you believe you have filed an ERC claim improperly, you have the option to withdraw it, even if it's currently under audit. Additional details on this process will be provided soon.
- Wait for the IRS ERC Settlement Program: This program, scheduled for release in the fall, is designed to assist businesses that have already received improper ERC, allowing you to avoid penalties and future compliance actions.
For more information, including detailed ERC guidelines, frequently asked questions and eligibility criteria, please do not hesitate to reach out to our team. We are dedicated to providing you with the guidance and support you need during these challenging times.
The IRS has a list of red flags that business owners should watch out for.
We understand these changes may raise questions and are here to address your concerns. Feel free to contact us, and we will be more than happy to assist you.
For more information on the above article or any business advisory services, contact Murry Guy, CPA, by calling (334) 887-7022 or leaving us a message below.
