The IRS announced an immediate halt to the processing of Employee-Retention tax Credit (ERC) claims that could last until the end of this year if not longer.  The announcement comes after repeated warnings to taxpayers after aggressive media marketers have been promoting the credit as available to individuals who are not eligible for the credit.

The fraudulent claims have bogged down the IRS processing of legitimate claims for months. The ongoing false marketing that the benefit is still accessible to any individual who was employed during the pandemic has led to millions of claims filed with a backlog of over 600,000.  The IRS criminal investigation unit is currently examining hundreds of claims with over $2.8 billion being potentially fraudulent.

On two different occasions this year, NAICU has pushed the IRS for the consideration of the backlog of claims filed by NAICU institutions.  Many NAICU members are facing budget shortfalls while they await claim processing.

The IRS has indicated that claims filed prior to September 14, 2023, will continue to be processed, just at a slower pace, with a goal of 180 days.  However, the processing could take longer if further information and review is required.  

The ERC was created and extended in pandemic stimulus bills to assist employers, not employees, who had to suspend services partially or fully or who experienced significant revenue loss as a result of the national emergency.  It was available through the 3rd filing quarter of 2021 and was eliminated for the 4th quarter and beyond as part of the American Rescue Plan.