Table of Contents:
On Thursday, September 14, 2023, the IRS announced (IR-2023-169) a processing moratorium on new employee retention credit (ERC) claims. Under the IRS moratorium, ERC claims received after Sept. 13, 2023, will not be processed until the moratorium ends. The IRS will continue to process ERC claims received before that date with additional scrutiny, extending the standard processing time from 90 days to 180 days.
What is the status of my refund?
If you have already filed a claim with Innovation Refunds prior to the IRS moratorium and are looking to learn more about the status of your refund, please contact us here and a member of our team will reach out to provide you with an update on your claim.
Why was the moratorium implemented?
Aside from a sizable backlog, the IRS stated this was because of “growing concerns that a substantial share of new claims from the aging program are ineligible and increasingly putting businesses at financial risk.” The IRS will also use the moratorium to add additional safeguards to return processing to “stop bad claims from ever coming in.”
Here are the steps the IRS plans to take to improve processes:
- Manage existing filings – Over 600,000 filings still await processing. This pause allows the IRS to clear the backlog of existing ERC filings, while the prolonged processing timeline gives them more time to review filings before issuing refund checks.
- Establish new procedures – The IRS seems to be bolstering its review process to avert ineligible companies from receiving the credit and to ensure only eligible companies receive the credit for specified eligibility periods.
- Emphasize eligibility importance – The IRS has stressed the importance of fully understanding business eligibility specifics before deciding to file an ERC claim.
How is Innovation Refunds responding to the ERC Moratorium?
Considering the recent IRS moratorium, Innovation Refunds has stopped our paid lead-generation advertising and curtailed new business development activity. We have adjusted operations to ensure we continue to serve our current clients effectively while adhering to recent changes to ERC processing. We will share any new information and updates to ERC processing times and eligibility guidelines as they become available.
We are mirroring the pause taken by the IRS, and holding on moving current customers from the eligibility assessment phase to the tax preparation phase. We believe this is the conservative decision given the potential of changing guidelines once the moratorium is lifted.
The tax returns that are already in the post-tax preparation phase will be carefully scrutinized by our independent tax professionals before they are submitted to the IRS. Our aim is to continue to serve our clients while diligently complying with changes in the IRS regulations.
As always, we are dedicated to maintaining open channels of communication and transparency throughout this process. We will continue to offer support and guidance to our customers during this waiting period.
What are the next steps employers can take?
The IRS also announced an amnesty program for employers who have filed but may have had a change of heart or otherwise may wish to withdraw their filing. Depending on current standing in the process, see below for the options:
For employers who have filed an ERC claim and awaiting processing: On Thursday, October 19, 2023 the IRS announced (IR-2023-193) a special withdrawal process for small businesses that filed an ERC claim but have yet to receive a refund. The option allows these employers to withdraw their claim and avoid the possibility of facing future penalties if they believe they are ineligible. The program seeks to support small businesses that were victims of ERC scams and aggressive firms with improper compliance measures.
While we support the IRS's decisions to protect small businesses from bad actors in the space, we want to assure all employers that Innovation Refunds’ team of independent tax professionals has carefully followed IRS regulations and procedures when processing claims.
For employers who haven't yet filed an ERC claim: These employers have the option to file an amended return. However, the processing of such returns will not begin until early 2024 at the soonest.
For employers who have received an ERC payment but now believe they are ineligible: The IRS is in the process of creating an ERC settlement program for the repayment of the credit.
For employers who suspect they are victims of an ERC-related scam: Such taxpayers are advised to report any tax-related illicit activities to the IRS.
Here are a few IRS resources you might find helpful:
Our commitment to our customers
At Innovation Refunds, we stand alongside eligible small businesses navigating the challenges of the IRS ERC moratorium. We recognize that these changes may cause unease but rest assured our team is committed to adapting and evolving to continue serving small business needs.
We remain ready to provide the guidance necessary to help eligible businesses apply for ERC benefits, following the moratorium. We believe in the resilience and potential of America's small businesses, and we are committed to empowering them to thrive amidst adversity. Together, we'll navigate these uncertain times.
Our mission and vision for the future
As we have always been, Innovation Refunds is a champion of small businesses in America, harnessing the power of exceptional customer service, cutting-edge technologies, and an unyielding dedication to rigorous processes and compliance standards to help them succeed.
Our mission is to unlock a future where small business owners thrive across the nation, effortlessly tapping into the financial resources, essential tools and trusted advice they need. As a driving force behind American jobs and economic growth, our vision propels us forward into a brighter, more promising horizon, where Innovation Refunds becomes the catalyst for a transformed, empowered entrepreneurial landscape.
INNOVATION REFUNDS DOES NOT PROVIDE LEGAL OR TAX INFORMATION.