Important Information Regarding Employee Retention Credits (ERC)

December 6, 2023

There are important recent developments related to Employee Retention Credits (ERC) that we feel clients should be aware of. 

  1. IRS has publicly alerted taxpayers of third-party firms claiming to specialize in ERC and filing extremely aggressive claims without fully informing taxpayers of the risks and preparing appropriate analysis / documentation.
  2. IRS recently put a moratorium on issuing ERC refund checks on new applications. Click here to learn more (IRS.gov)
  3. IRS also recently announced a withdrawal process for ERC claims that have not been paid, but for which taxpayers now realize may be too aggressive. Click here to learn more (IRS.gov) 
  4. IRS has also published that they are going to create a repayment program for taxpayers who already got their refund but want to return it to the IRS to lower or absolve their risk altogether related to ERC.  No details are released yet, but we anticipate this in the coming months.
  5. The Treasury department is considering expanding the statute of limitations for ERC claims, which would give the IRS more time (2 additional years) to examine ERC claims.  This could pose a potential problem with respect to the statute of limitations on the income tax returns for the related years, whereby taxpayers have already paid income tax on ERC refunds, and could lose the ability to ask for those income tax payments back.

We strongly encourage clients who used third-party providers to claim ERCs understand how they specifically qualify for the ERC program and also have the necessary documentation and analysis to support an IRS audit in the future. Before any IRS repayment programs close, clients should ensure that they completely understand their potential benefits and risks of their ERC claims.

Please reach out to your GFC engagement team with questions or comments as you consider this news and taking any action.

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