IRS Begins Next Phase of ERC Processing: Most Claims Deemed High-Risk

The IRS has announced plans to deny tens of thousands of high-risk Employee Retention Credit (ERC) claims, entering the next stages of the detailed review they initiated last year to protect taxpayers and small businesses. The review of the first stage revealed widespread concerns about improper claims, with between 10% and 20% falling into the highest-risk category and up to 70% showing an unacceptable level of risk. As a result, the IRS will begin processing lower-risk claims while maintaining a moratorium on new claims submitted after September 14, 2023. The IRS urges patience as it continues to scrutinize claims to prevent improper payouts and assist eligible taxpayers. Additionally, the IRS will consult Congress on potential legislative action regarding the future of the moratorium. The agency emphasizes that taxpayers should not take any immediate action and should avoid contacting IRS toll-free lines for claim updates.

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