The IRS has finally begun to respond to the multitude of IRS Employee Retention Credit claims submitted over the last several months.
As previously discussed here on the Bryson Blog, due to suspected widespread misuse, the IRS placed a pause on processing new ERC Claims in Fall of 2023. A few months ago, the IRS announced that they would begin processing ERC claims, with a special emphasis on accelerating legitimate credit payments and denying credits the IRS deems to be improper.
The IRS has now sent out approximately 28,000 disallowance letters to businesses the IRS has determined have a high risk of being ineligible to receive the IRS Employee Retention Credits. The IRS believes this will prevent up to $5 billion in improper payments.
The IRS has also identified approximately 50,000 valid ERC claims and is working to process those payments now.
IRS Commissioner Danny Werfel has said, “the Employee Retention Credit is one of the most complex tax provisions ever administered by the IRS, and the agency continues working hard to balance or work to protect taxpayers from improper claims while also making payments to qualifying businesses.”
It’s important to know that the 28,000 ERC claim denials do come with administrative appeal rights through the IRS Independent Office of Appeals. The IRS states that they are aware, through feedback from the Tax Professional community, that there are potential errors with their determinations, and the IRS has pledged to monitor the situation to avoid any unnecessary burdens on businesses and their Tax and Accounting Professionals, sharing that if a claim can be proven to be properly denied, the IRS will work to get it right.
Did you submit a claim for the IRS Employee Retention Credit? Are you one of the 28,000 to receive a disallowance letter? Be sure your legal rights and interests are protected. It’s time to consult with a Tax Attorney to ensure your ERC claims are properly handled. Contact Bryson Law Firm, LLC today.
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