Last week, the Internal Revenue Service (IRS) announced it is working quickly to process about $10 billion worth of outstanding Employee Retention Tax Credit (ERTC) claims and that most of the current batch of claims will be approved.
The ERTC, created by the CARES Act in March 2020, was a lifeline to small businesses and nonprofit groups struggling to keep their employees on their payrolls during the COVID-19 pandemic. Last year, IRS Commissioner Danny Werfel ordered the agency to immediately stop processing new ERTC claims due to a “surge of questionable claims” that he attributed to exploitative marketing pushing the credit as a lifeline.
“The IRS understands the vital importance of Employee Retention Credits payments for struggling small businesses, and we are continuing to make important progress on one of the most complex tax administration provisions we’ve ever had,” said IRS Commissioner Danny Werfel. “The IRS is working diligently to process ERC claims as quickly as possible, while guarding against improper payments driven by unscrupulous marketers. In recent weeks, the IRS has made substantial progress in separating eligible claims from the wave of ineligible claims that have come in, and we continue working to refine our models to identify more eligible claims.”
To help speed processing of ERTC claims, the IRS announced last month a supplemental claim process to help tax preparers and other third parties make any necessary corrections to Employee Retention Tax Credit (ERTC) claims.
This article was provided to OSAP by ASAE's Power of Associations and Inroads.