What You Need to Know About the ERTC Moratorium

Dave Danic, Director of Tax at Summit Virtual CFO by Anders, has an update on the ERTC Moratorium.  

Hello! This is Dave Danick, and I'm the Director of Tax Services at Summit Virtual CFO by Anders. Today, we're going to talk about the Employee Retention Tax Credit Moratorium that the IRS placed two weeks ago. What this means is that the IRS is going to pause reviewing any new claims until 2024 as they relate to the Employee Retention Tax Credit. As you remember, the ERTC was for employers who kept employees on the payroll during the pandemic and also met certain qualifications such as a decrease in revenue or if they met certain government mandated shutdown requirements. The IRS believes that upwards of 90% of claims outstanding right now may be fraudulent based upon that second qualification. The reduction in gross receipts qualifier is very straight forward., but it's very nebulous on what it means to have a government shutdown. So, what we are advising our clients, is that if you feel you qualify for the Employee Retention Tax Credit, please continue to do so and continue to send it into the IRS. What this means is it's going to take upwards of six months or maybe even nine months to receive your refund. It's just that the IRS is placing a much closer eye on these claims right now. Legitimate claims are still legitimate claims, and we encourage you and your company to file for the Employee Retention Tax Credit. If you feel that you may have used a third party and that the qualifications that you met or said that you met might not be legitimate, we encourage you to provide us with information we can review, and then we can also correct any filing. The IRS is also going to issue some guidance to those companies that feel that they may have not have filed a proper claim and fix things in a different manner, but we don't have that guidance yet. So, all in all, the ERTC is a great program if you qualify, and we encourage you to continue to file those amended payroll tax returns to get those funds. If you need help to determine if you qualify, we can certainly help you and please reach out if you have any questions. Thank you.