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1.4 Million ERC Claims Overwhelm IRS, Tens of Thousands Deemed Improper: What Business Owners Need to Know!

A red stoplight stands in front of the Internal Revenue Service (IRS) headquarters in Washington, D.C., U.S., on Wednesday, May 15, 2013. The widening inquiries into the IRS are focusing less on why employees singled out small-government groups for scrutiny and more on agency executives who didn't inform Congress earlier. Photographer: Andrew Harrer/Bloomberg

The IRS continues to grapple with processing 1.4 million Employee Retention Credit claims, having identified numerous improper claims among them while striving to ensure eligible businesses receive their due under the complex program introduced during the COVID-19 pandemic.

IRS Grapples with 1.4 Million ERC Claims, Identifies Thousands as Improper

According to the article Best Life, four years after the Employee Retention Credit (ERC) program was introduced in President Donald Trump‘s 2020 pandemic relief bill, the IRS is still dealing with its aftermath. The ERC allows small businesses to claim up to $28,000 per employee each year if they were affected by COVID-19. However, the IRS has received 1.4 million ERC claims that need processing. Recently, the IRS found “tens of thousands” of these claims were improper.

Since September 2023, the IRS has reviewed over a million ERC claims worth more than $86 billion. They found about 20 percent of these claims were high-risk and did not follow the rules set by Congress, so they will be denied. IRS Commissioner Danny Werfel asked for patience, saying they want to prevent wrong payouts and ensure that eligible businesses get their money.

READ ALSO: 11,834 New Mexicans To Receive $1,535 In Extra SNAP Benefits: State Efforts Combat Food Insecurity!

1.4 Million ERC Claims Overwhelm IRS, Tens of Thousands Deemed Improper: What Business Owners Need to Know! (PHOTO: NJBIA)

IRS Urges Patience for Medium-Risk ERC Claims Amid Payment Delays

Furthermore, for the 60 to 70 percent of claims marked as medium-risk, the IRS needs more information to decide if they are valid. The 10 to 20 percent of low-risk claims will start getting payments soon, but more slowly than during the pandemic. The IRS advises people with pending ERC claims to wait for further instructions and warns against false promises from promoters about eligibility.

READ ALSO: Weingart Tower In Downtown LA: 19-Story Supportive Housing With 278 Units For Homeless

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