IRS Announces Plans to Deny Many ERTC Claims Due to Errors and Non-Compliance
New Warning Signs for Incorrect ERTC Claims and Upcoming Voluntary Disclosure Program
According to MARCUM LLP, recent updates to the ERTC process have created new difficulties for businesses. On June 20, 2024 the IRS announced it plans to deny many ERTC claims because of errors and non-compliance. The IRS estimates that 10% to 20% of claims are high-risk and will likely be denied soon. Another 60% to 70% are under further review due to high-risk factors. The remaining 10% to 20% are considered low-risk and payments for these are expected to be processed later this summer.
In addition to these developments the IRS updated its warning signs for incorrect ERTC claims on July 26, 2024. New warning signs include claims from businesses that operated fully during the pandemic without a drop in gross receipts and claims for wages used for Paycheck Protection Program (PPP) loan forgiveness. This complements the seven existing warning signs which include issues like claiming too many quarters and citing non-qualifying government orders. The IRS has advised businesses to either withdraw questionable claims or amend their returns to correct any errors. They also announced plans to reopen the ETRC Voluntary Disclosure Program soon though it may have less favorable terms.
READ ALSO: CVS Health Slashes 2024 Forecast For 3rd Time, Cuts Costs $2 Billion, CEO Takes Charge Of Insurance Division!
20% of ERTC Claims at Risk of Denial: IRS Warns of Errors and Non-Compliance, Businesses Urged to Act Quickly! (PHOTO: Marcum LLP)
Guidance for Businesses Facing ERTC Claim Denials: Appeals and Next Steps
For businesses facing denials of their ERTC claims immediate action is recommended. They can appeal the denials to the IRS Independent Office of Appeals within 30 days of receiving the notice or file a refund suit within two years. Businesses are advised to consult with a trusted professional to explore their options for withdrawing claims engaging in voluntary disclosure or appealing denied claims. This guidance will help navigate the complex landscape of ERTC claims and ensure compliance with IRS requirements.
