IRS Transcripts
03 / 20 / 24

IRS Employee Retention Credit - March 2024 Update

There have been many changes and initiatives at the IRS with respect to the Employee Retention Credit, all targeted at addressing improper ERC claims.  Here are a few changes and initiatives to be aware of currently:

  • The IRS placed the ERC on its “Dirty Dozen” list of top tax scams.
  • The IRS announced an increased focus on enforcement and audit to address fraudulent ERC claims.
  • The IRS issued a moratorium on processing new ERC claims for an indefinite period. The IRS Commissioner has recently noted that there is no definitive timeline as to when the moratorium may be lifted. Claims filed prior to September 14, 2023, are still being processed.
  • An increase in audits and criminal investigations should be expected.
  • The IRS has an ERC claim withdrawal process for businesses who filed for Employee Retention Credits but have not yet received a refund that enables these businesses to withdraw their submission and avoid civil penalties as a result. There is no official end-date for this withdrawal program currently.
  • The IRS also has an ERC Voluntary Disclosure Program (VDP) for businesses who received erroneous ERC refunds and have not yet been notified of an audit or criminal investigation. There is a deadline of March 22, 2024, to apply. If accepted, the business agrees to repay 80% of the refund amount to the IRS and will not be subject to any civil penalties or interest.  Part of the participation in this program requires the business to identify the third-party that assisted them in evaluating and filing the claims.  Criminal investigations may still occur, even after acceptance into the VDP. 
  • Congress has proposed legislation that would:
    • End the ERC program early – January 31, 2024 (deadlines are currently 4/15/24 for 2020 claims and 4/15/25 for 2021 claims).
    • Increase penalties for third-party persons or companies who marketed ERC schemes by exaggerating ERC benefits, misrepresenting eligibility criteria, and overstating potential tax savings which resulted in fraudulent or erroneous tax return filings.
    • Increase the paid tax return preparer penalty for failure to comply with due diligence requirements on ERC filings.
    • Allow the IRS to adjust the Statute of Limitations on audits and assessment periods.

Bryson Law Firm, LLC recommends that businesses who claimed the IRS Employee Retention Credit ensure that a qualified Tax Professional re-evaluates these claims and, if necessary, withdraw the claims or apply for the VDP in the event the business was not eligible.  Need help?  Contact Bryson Law Firm, LLC today to schedule a free, initial consultation with one of our Attorneys to learn more.