Nonprofit Resources
Next Steps as IRS Halts Processing of New ERC Claims Through End of Year
This latest action by the IRS is further confirmation of its commitment to crack down on ineligible and even fraudulent claims that are made on the pandemic-era program. The IRS also reiterated its warning against aggressive promoters of the ERC who take a large chunk of organizations’ ERC claims. The IRS has already initiated over 252 criminal investigations into aggressive ERC companies, and 15 of those criminal investigations have resulted in federal charges being filed.
The IRS also provided several links for organizations that need help determining eligibility for the ERC, including a new question-and-answer guide that acts as a decision tree for organizations exploring the ERC or wanting to determine whether their claims are valid. You can read the entire IRS Notice here.
Depending on where an organization is in the ERC process, there may be decisions that the organization should make, including the following:
- If you have already made an ERC claim, have received your funds, and are now wondering if you were eligible – You should reach out to a trusted tax professional for an objective assessment of your eligibility. If you determine that you were ineligible for part or all of your ERC claim, the IRS is in the process of creating a settlement program for taxpayers who made an ERC claim that they believe to be in error. The IRS said it would provide more details this fall.
- If you have already made an ERC claim, have not received your funds, and are now wondering if you were eligible – We recommend that you still reach out to a trusted tax professional to determine whether your claim was eligible. Then, if you determine that you were ineligible for some or all of the claim, you may withdraw the claim while it is being processed. The IRS noted that payouts for existing claims will continue during the moratorium period, but at a slower pace due to detailed compliance reviews. The standard processing goal will increase from 90 days to 180 days (or longer if the IRS determines that the claim warrants further review or audit).
- If you have not yet made an ERC claim – You will need to wait to submit your claim until the moratorium on processing the ERC is lifted, which will be at least December 31, 2023. The date could be extended into 2024, depending on how long it takes the IRS to engage in its enhanced review of current ERC claims. The IRS recommends that you work with a trusted tax professional to determine eligibility before submitting an ERC claim.
CapinCrouse has been assisting nonprofit clients with ERC claims since 2021, and our team of experienced nonprofit tax professionals can assist your organization no matter what stage of the ERC process you are in.
Our ERC services include the following. (Note that these would be considered non-attest services when provided to our attest clients.)
- Initial consultations with organizations that are considering the ERC
- Consultations with organizations that have questions about the ERC
- Gathering and drafting of ERC eligibility documentation you can keep in case of an IRS audit or for external auditors
- Calculation of the amount of qualified wages and ERC claim
- Drafting and signing as paid preparer of the 941-X Form(s) used to submit an ERC claim
- Review of ERC claims that have already been made or are about to be made
Please contact us with questions or to learn more about how we can assist you with the ERC. We are here to help.
Additional Resources:
Employee Retention Credit Frequently Asked Questions
IRS Launches Process for Withdrawing Employee Retention Credit Claims
Assistance with the Employee Retention Credit
Accounting and Reporting for the Employee Retention Credit
Tax Implications of the Employee Retention Credit
