The IRS is set to process and pay out 50,000 valid Employee Retention Credit claims soon, but businesses may still face delays and potential issues with incorrect denial letters, amid efforts to curb fraud and possibly end the program early.
IRS to Disburse 50,000 Employee Retention Credits Payments Soon Amidst Fraud Concerns and Claim Disputes
According to the Jacksonville Business Journal, tens of thousands of small businesses will soon get their overdue Employee Retention Credits (ERC) payments as the IRS processes 50,000 valid claims. This follows a period where the IRS had to sort through over a million claims, many of which were found to be fraudulent or incorrect. Since last September, the IRS has managed to pay out $230 billion in Employee Retention Credits, but businesses might still face delays. Only the lowest-risk claims are being handled for now, with additional claims expected to be processed later.
The IRS has also sent out 28,000 letters denying claims it found high-risk, totaling about $5 billion. There are worries that some of these letters might be wrong, with about 10% potentially containing errors. Businesses receiving these letters may face long disputes as the IRS works on improving its claim processing.
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$230 Billion in Employee Retention Credits Payments: IRS to Disburse 50,000 Valid Claims Amidst Fraud Concerns and Potential Early Program End (PHOTO: Accounting Today)
IRS and Congress Consider Ending Employee Retention Credits Program Early Amid Growing Backlog and Fraud Issues
The IRS is working with Congress to possibly end the Employee Retention Credits program early due to ongoing fraud concerns. The program, which saw a huge rise in claims, has caused a significant backlog. Businesses can still apply for Employee Retention Credits for 2021 claims until April 15, 2025, but with the backlog continuing to grow, further delays are likely.
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