What Are the Next Steps With Processing Employee Retention Credits (ERCs)?
On June 20, 2024, the Internal Revenue Service (IRS) published IRS enters next stage of Employee Retention credit work; review indicates vast majority show risk of being improper (IR-2024-169). This IRS publication shares the next steps for the processing of ERC claims, although they have not lifted the moratorium on the processing of claims submitted after September 14, 2023.
IRS Next Steps for Processing ERC Claims
The IRS is processing claims submitted before that time, but at an even slower, more judicious pace than previously. The IRS has decided that this is required due to the excessive amount of fraud in the filings that were made. Unfortunately, those with valid claims are required to go through the same process. The IRS is now using internal and other public data to determine if a claim is a high risk, unacceptable or low risk of being incorrect.
The IRS did announce that low-risk claims will be processed first, and it is anticipated that payments will go out later this summer, still with increased scrutiny. The IRS stated that it would correct calculations if any errors were determined and pay a lower amount. Unfortunately, the IRS reduces payments inappropriately. Any reduced payment should be reviewed by a trusted member of the Cherry Bekaert ERC team to determine whether the reduction is appropriate.
What Should I Do Now?
There is nothing you need to do now. The increased scrutiny arose from ERC mills that were filing many inappropriate claims and the IRS computer systems and processing procedures being so antiquated. If your business worked with an accredited advisor, such as Cherry Bekaert, you do not need to be concerned with this heightened scrutiny.
Your Trusted Advisor
All ERC claims prepared at Cherry Bekaert were completed at a “more-likely-than-not” level of authority and would not be in the high-risk category.
If another provider was used, the IRS may not have all the information needed to determine if a claim is acceptable. We anticipate that the IRS may have additional questions. Cherry Bekaert has helped a number of clients who have already received additional questions.
To quickly resolve these issues, the Cherry Bekaert ERC team can work directly with the IRS to supply any requested information. The IRS prefers working with professionals in these situations based on a deep understanding of the ERC rules and reasons for the requests while responding quickly and appropriately to resolve the issues. Please reach out to a member of the Cherry Bekaert ERC team if the IRS contacts you about the filed claims.
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