Thought Leadership by Ian Williams, Principal | KBKG

On June 19, the IRS issued a much-needed update on the status of ERC processing.  KBKG has summarized the key points from their news release below.

  • Post-Moratorium Claims: The moratorium on the processing of claims filed after 9/14/23 is still in effect. A specific resumption date has not yet been determined. The IRS is going to use this time to catch up on earlier claims while continuing to ask for help from Congress, which could include early termination of the existing 4/15/25 filing deadline for 2021 claims and requesting an extension of their audit statutes for existing claims.
  • Pre-Moratorium Claims: The IRS continues to process claims filed pre-moratorium, however at a much slower rate as new standards of scrutiny are being applied to each claim. Older claims are generally being processed first, but expect a higher volume of notices and requests for information before claims are processed. The IRS mentioned that they expect to process low risk claims (10-20% of the population) later this summer.

What to do if you are awaiting an ERC claim:

  • Wait Patiently: Unfortunately, barring additional pressure from Congress, businesses with claims in process will simply have to continue to wait for processing with limited status updates available from the IRS.
  • Check Diligently for IRS Notices: If the IRS sends a notice or request for information related to your ERC claim, review it carefully and contact a tax professional immediately for guidance. The best way to speed up IRS processing and avoid putting legitimate claims in jeopardy is to respond timely to any requests for information. Additional details on what to expect from notices and refund processing can be found here. It is common to receive multiple notices that the IRS needs 60 more days to process your claims.
  • IRS Phone Line: The IRS discouraged businesses from calling their toll-free number for status updates; this phone line will generally only share whether or not a claim has been received and is in line for processing.
    • Keep in mind that if you are uncertain whether your 941-X claim has been received, the phone line is the only way to get confirmation that the 941-X is in the IRS queue. Detailed instructions are below in the event that a call is necessary.

Since the moratorium went into place in September of 2023, the IRS has taken the following actions:

  • Digitized and analyzed more than 1 million claims to assess risk and categorize claims into risk categories. Per their estimates, only 10-20% of claims were identified as low risk.
  • Processed 28,000 claims worth more than $2 billion, while rejecting 14,000 claims worth over $1 billion.

With the IRS’ continued delays in processing moving forward, here is a quick update on the other legislative factors impacting ERC:

  • Tax Relief For American Families and Workers Act of 2024 – This piece of legislation, which passed the house in January would have retroactively ended the statute of limitations for all ERC filings at 1/31/24, has stalled in the Senate and is unlikely to be passed in its current form. While additional legislation could be proposed that would impact ERC, for now, the current statutes hold.
  • The statute of limitations for filing for the 2020 credit ended 4/15/24. The statute of limitations for filing for any 2021 quarters is 4/15/25, pending potential further legislation.

Below are the steps for contacting the IRS to get an ERC update from an officer or authorized representative:

  1. Calling the IRS Business Line: 800-829-4933
  2. After connecting with an agent, say you are requesting to get an update for the ‘Employee Retention Credit’
  3. You will be asked for the EIN of the account
    1. You will be asked to verify business name and mailing address
  4. You will be asked to verify yourself
    1. Name, role, SSN, DOB, etc.
  5. If all checks out from the above, you should be able to get information from the agent limited to which 941-Xs they have on file for your business and whether or not the 941-Xs have been assigned for processing.

Read the full IRS update here.

Ian Williams, Director Research & Development Tax Credits and Employee Retention Credits | KBKG

Ian Williams | Principal – Research and Development Tax Credit Services

Ian Williams is a Principal for KBKG, specializing in Research & Development Tax Credits and Employee Retention Credits. Ian spent eleven years at a Big Four accounting firm specializing in R&D tax credits and fixed asset studies across a variety of industries. He has extensive experience in. Read More