IRS HAS LIFTED MORATORIUM
Some restaurant owners are still waiting for their ERTC refunds. It has been very frustrating for restaurants that really need the money and have waited 10 months or longer.
The ERTC (Employee Retention Tax Credit) was instituted during the depth of the pandemic to help businesses keep their employees on payroll.
More than 1 million claims worth more than $86 billion were filed last year.
Unfortunately, the program became a target of aggressive marketing and some promoters made questionable claims and charged exorbitant amounts to unwary business owners. Others misinterpreted the law or cooked the books to take advantage of free money.
The IRS became so concerned that on September 14, 2023, they put a moratorium or freeze on refunds until they could investigate in more detail. “This is one of the most complex credits the IRS has administered, and we continue to ask taxpayers for patience as we unravel this complex process, IRS Commissioner Danny Werfel stated.
During this moratorium, the IRS identified between 10% and 20% of claims fall into what the agency has determined to be the highest-risk group, which show clear signs of being erroneous claims. Tens of thousands of these will be denied in the weeks ahead.
In additions to this highest-risk group, the IRS analysis also estimates between 60% and 70% of the claims show an unacceptable level of risk. For this category, the IRS will be conducting additional analysis to gather more information.
For the low risk claims, the IRS will begin processing these claims that have been waiting. The IRS anticipates some of the low risk claims will be going out later this summer.
The IRS emphasized that these refunds will go out at a dramatically slower pace than payments that went out during the pandemic given the need for increased scrutiny.
The oldest claims will be processed first, and no claims submitted during the moratorium period will be processed at this time.
Taxpayers with outstanding claims do not need to take any action at this point. Taxpayers may receive letters requesting more information. If you get a letter, be sure to forward it to Kallas.
