IRS immediately stops COVID-era small business tax credit after ‘flood’ of scams

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The moratorium on processing the Employee Retention Credit will last through at least the end of the year and covers all new claims.

Existing claims are being processed but, due to fraud concerns, may take longer – from the goal of 90 days to as long as 180 days and beyond, the IRS warned. Applicants may also be asked to submit additional information.“The IRS is increasingly alarmed about honest small business owners being scammed by unscrupulous actors, and we could no longer tolerate growing evidence of questionable claims pouring in,” IRS Commissioner Danny Werfel said in a statement.

“The IRS reminds anyone who improperly claims the ERC that they must pay it back, possibly with penalties and interest. A business or tax-exempt group could find itself in a much worse financial position if it has to pay back the credit than if the credit was never claimed in the first place,” the agency said.

 

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