Do Not Hold Your Breath, your ERC refund claims won’t arrive anytime soon…

The Commissioner of the IRS, noted that although the full moratorium on processing claims will end by April or May, they are only processing about 1000-2000 claims per week. That is just a small number given the growing backlog at the IRS. At that rate, the problem is growing each day that goes by and based on current numbers it may be likely that all claims are never processed. It is noted in various sources that there may well be over 1 million claims or more pending. No one at the IRS seems to have an exact count.

Lawsuits have already been filed on processing the claims over the long and excessive delays. What can taxpayers do? Call their Congressional Representatives which have been inundated with calls or bring a refund suit? How about the Taxpayer Advocate? It is still not clear, what the best course of action should be.

The IRS also issued 7 warning signs for questionable ERC claims in IR-2024-39. The suspicious signs include:

  1. Too many quarters being claimed. Employers, did you meet the eligibility for each and every quarter?
  2. Government orders that don’t qualify. Document, document, document! In some cases, the IRS has been seeing cases where the promoters supply generic narratives about “governmental orders” which is not enough.
  3. Too many employees and wrong and erroneous calculations. Check the numbers!
  4. Businesses citing supply chain disruption issues, be careful to follow IRS announcements in this area.
  5. Businesses which overstate the qualifying wages for specific tax periods. Payroll records should be maintained to support the claims.
  6. Businesses that did not pay wages or did not exist during the period claimed.
  7. Be on high alert if your promoter claimed there was nothing to lose.
  8. The IRS is going after both taxpayers claiming the credits and promoters who took part in the erroneous claims.
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