Do you know the IRS has stopped processing new Employee Retention Tax Credit (ERTC) claims? As you may be aware, the ERTC was introduced during COVID. The tax credit was intended to address three different situations:
- To offer money back or help employers that retained their employees during the midst of the pandemic
- To provide a credit during certain quarters of 2020 and 2021 to small businesses that were partially or fully shut down by COVID lockdowns or restrictions
- To offer money to businesses that suffered a loss in revenue, depending on the quarter
In a nutshell, business owners could go back and amend their payroll tax returns and claim a credit against their paid payroll taxes. If the credit was bigger than the taxes paid, they would get back money as a refundable tax credit.
Why the Changes?
You may have noticed a lot of “noise”—calls, emails and advertisements—from “less desirable firms” that are attempting to take advantage of the credit. They’ve been stating that businesses can get millions of dollars back from the government—resulting in an avalanche of possibly spurious claims. The proliferation has caused the IRS to stop processing new ERTC claims, at least until the end of the year, and intensifying the scrutiny of claims already received.
If You’ve Submitted a Claim
If you’ve already received your refund, you have nothing to worry about as long as everything is legitimate. If you have any concerns about the legitimacy of your claim or if you were truly eligible, have a tax professional or your payroll service review the amended return you used to get the tax credit.
If you’re waiting on a decision for your ERTC claim, expect delays. Payments will continue but at a slower pace due to detailed compliance reviews that will stretch the standard goal of 90 days to at least 180 days. It’s important to note that the ERTC hasn’t been canceled but claims are being audited more closely. Beware of ERTC scam promotions; anyone who incorrectly claims the credit has to pay it back and may also be charged penalties and interest.
Note: This tax credit doesn’t expire until beginning in 2024 through 2025 so if you’re still thinking about filing an amended return by all means do it—just don’t expect to have it processed anytime soon. The ERTC hasn’t been canceled but is merely being reviewed to ensure only those who are truly eligible benefit.
Have you been putting off investing in your business until receiving funds from your ERTC claim? Since it might be a longer wait than expected, you may want to investigate short-term financing options like a business term loan or business line of credit from Clear Skies Capital to bridge the gap. To discuss your specific situation, please contact us at 800-230-9822.