About 10% to 20% of the 1 million claims show “clear signs of being erroneous” and tens of thousands of those will be denied in coming weeks, the IRS said.said Thursday a review of 1 million claims for the Employee Retention Credit representing $86 billion shows the “vast majority” are at risk of being improper.
The ERC was designed to help businesses retain employees during pandemic-era shutdowns, but it quickly became a magnet for fraud. Its complex eligibility rules allowed scammers to target small businesses, offering help applying for the ERC for a fee — even if they didn’t qualify.About 10% to 20% of the 1 million claims show “clear signs of being erroneous” and tens of thousands of those will be denied in coming weeks, the IRS said.
About 10% to 20% show low risk, and the IRS will begin processing those claims. The first payments for that group should begin later this summer. The IRS stopped processing new claims in September and it said Thursday that the moratorium on ERC claims submitted after Sept. 14, 2023 will continue. The IRS said businesses can pursue the claim withdrawal process if they need to ask the IRS not to process an ERC claim for any tax period that hasn’t been paid yet.