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IRS Issues Update on Employee Retention Credit Claims

June 28, 2024

IRS to Deny High-Risk Employee Retention Credit Claims, Expedite Low-Risk Claims

The IRS has announced its plans to deny tens of thousands of high-risk Employee Retention Credit (ERC) claims. This decision follows a comprehensive review that identified widespread improper claims. The IRS will also begin processing lower-risk claims to support eligible businesses.

Key Points:

  • High-Risk Claims: The IRS identified 10-20% of ERC claims as high-risk, showing clear signs of being erroneous. These will be denied in the coming weeks.
  • Moderate-Risk Claims: 60-70% of claims fall into a moderate-risk category. Further analysis will be conducted to improve compliance reviews.
  • Low-Risk Claims: 10-20% of claims are low-risk. These will be processed at a slower pace, with the first payments expected later this summer.

The IRS cautioned taxpayers who filed ERC claims that the process will take time, and the agency warned that processing speeds will not return to levels that occurred last summer. Taxpayers with claims do not need to take any action at this point, and they should await further notification from the IRS. The agency emphasized those with Employee Retention Credit claims should not call IRS toll-free lines because additional information is generally not available on these claims as processing work continues.

For more details, visit the IRS website or watch SBAM President & CEO Brian Calley offer insight in our recent Small Business Briefing.

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