IRS Pauses Processing New ERC Claims

At A Glance

• The IRS announced new claims for the employee retention credit (ERC) won’t be processed until at least 2024.
• The IRS also stated the existing queue of claims will continue to be processed, albeit at a slower pace due to fraud concerns.

New ERC Claims Paused

IRS Commissioner Danny Werfel ordered the immediate pause on processing new employee retention credit claims, beginning, September 14, to run through at least December 31, 2023, due to concerns about fraudulent employee retention credit (ERC) claims.

This pause has been put in place by the IRS over growing concerns about fraudulent marketing schemes that are targeting employers and putting them at increased financial risk. The IRS is encouraging employers to seek out trusted tax professionals who understand the complex ERC rules and to review IRS guidance and tools for help determining ERC eligibility, including frequently asked questions.

The IRS also has a new question and answer guide to help businesses understand if they are actually eligible for the credit.

The full IRS announcement is posted to IRS.gov: IRS ERC Pause Announcement.

Existing ERC Claims

The statute of limitations for claiming the credit is not based on when the IRS processes an amended return, but on when the return is submitted. Any claim that has been submitted to the IRS and received before the statute expiration will be protected under Internal Revenue Code.

The IRS will continue to process existing claims; however, due to concerns by the IRS of fraudulent claims, they will be under tougher scrutiny.

Next Steps

Employers can expect to experience a delay in processing their ERC claims with the IRS. In the meantime, employers are highly encouraged to review the eligibility resources provided by the IRS.

Paylocity is closely monitoring this and will share additional information as it becomes available.

Thank you for choosing Paylocity as your Payroll Tax partner. This information is provided as a courtesy, may change, and is not intended as legal or tax guidance. Employers with questions or concerns outside the scope of a Payroll Service Provider are encouraged to seek the advice of a qualified CPA, Tax Attorney, or Advisor.