Danny Werfel, IRS Commissioner, speaks after being sworn in at IRS headquarters in Washington on April 4, 2023.
Ting Shen | Bloomberg | Getty Images
The IRS will deny billions of dollars’ worth of claims for… Tax relief in the era of the pandemic While working on Process deposits with lower risksThe agency said Thursday afternoon.
Issued to support small businesses during the COVID-19 pandemic Employee retention creditor ERC, is worth thousands of dollars per qualified employee. However, the agency It has stopped processing new registrations The IRS said in a news release in September amid a surge in “questionable allegations.”
The agency added that it would extend this moratorium.
After investigating more than 1 million claims worth roughly $86 billion, the IRS said in the statement that it has identified 10% to 20% of the most risky claims, and “tens of thousands” will be denied in the coming weeks, according to the agency. Another 60% to 70% of claims with an “unacceptable level of risk” will be examined further, the IRS said.
“We will now use this information to deny billions of dollars in clearly incorrect claims and begin the additional work of issuing payments to help taxpayers without any red flags on their claims,” IRS Commissioner Danny Werfel said in a statement.
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During the ERC review period, the agency processed 28,000 claims received before September 2023 worth $2.2 billion and denied more than 14,000 claims worth $1 billion, according to the statement.
Overall, compliance efforts for false ERC claims have exceeded more than $2 billion since last fall, the IRS said.
“This is one of the most complex credits administered by the IRS, and we continue to ask taxpayers for patience as we unravel this complex process,” Werfel said. “Ultimately, this period will help us protect taxpayers from inappropriate payments that have flooded the system and get checks to those who truly qualify.”
The ERC withdrawal program remains open
With more than 1.4 million unprocessed ERC claims and many “questionable” filings, IRS urges taxpayers with pending ERC claims to look into agency claims Withdrawal program.
There’s still time for that Withdraw the claim If you do not receive a payment for any tax period. If you receive a check but don’t cash or deposit it, you can use this software to return it.
If it qualifies, the IRS will roll back the original ERC claim and no penalties or interest will apply.
“It’s an important moment” because you can still fix ERC errors before the IRS detects them, Dean Zerbe, national managing director at Alliantgroup, previously told CNBC.
