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IRS Issues Moratorium on New Employee Retention Credit (ERC) Claims
October 16, 2023
In September 2023, the IRS paused new Employee Retention Credit (ERC) claims due to fraud concerns. Learn how your organization may be impacted.
At A Glance
- The IRS announced a moratorium on new claims submitted for the Employee Retention Credit (ERC).
- The effective date for the moratorium is September 14, 2023, and while no end date has been set, the IRS expects the moratorium to last through December 31, 2023, at a minimum.
- The IRS also stated the existing queue of claims will continue to be processed, albeit at a slower pace due to fraud concerns.
Pause on New ERC Claims
New ERC Claims Paused
Internal Revenue Services (IRS) Commissioner Danny Werfel ordered an immediate pause on processing new ERC claims, beginning September 14, 2023, to run through at least December 31, 2023, due to concerns about fraudulent claims.
The IRS put this moratorium in place over growing concerns about fraudulent marketing schemes targeting employers and putting them at increased financial risk. The IRS is encouraging employers to seek out trusted tax professionals who understand the complex ERC rules. Additionally, employers should consider consulting IRS resources and tools to assist in assessing their ERC eligibility, including their frequently asked questions.
The IRS also has released a new ERC eligibility checklist to help employers determine if they are eligible for the credit.
The full IRS ERC Pause Announcement is posted to IRS.gov
Next Steps
Existing ERC Claims
The IRS has announced their heightened scrutiny of claims submitted before September 14, 2023. They anticipate that the processing time for ERC claims, which typically took 90 days, will now extend to a period of 180 days.
New ERC Claims
Paylocity will continue to submit ERC claims on behalf of our clients. The IRS will receive but not process new ERC claims until they lift the moratorium.
ERC Claim Submission Deadline
Businesses can file ERC claims for 2020 and 2021. For all eligible quarters of 2020, the deadline to file for the ERC is April 15, 2024. For all eligible quarters of 2021, the deadline is April 15, 2025. Claims will not be rejected as late if they are filed by the deadline, regardless of whether the IRS reviews them after the filing deadline.
Additional Questions
Please review the list of Frequently Asked Questions below, prepared by Paylocity on the ERC moratorium. Paylocity is closely monitoring this situation, and we will share additional information as it becomes available from the IRS.
Frequently Asked Questions
Question | Answer |
What is the effective date of the IRS moratorium on processing new ERC claims? | The processing moratorium is in effect for all new ERC claims submitted on or after September 14, 2023. |
When does the IRS moratorium end? | The end date for the moratorium has not been set; however, the IRS expects it to last at least through December 31, 2023. |
Will the IRS reject new ERC claims submitted during the moratorium? | The IRS will still accept new ERC claims; however, they will not process ERC claims filed on or after September 14, 2023, until they lift the moratorium. |
Will Paylocity continue to submit ERC claims? | Paylocity will continue to submit new ERC claims to the IRS on behalf of our clients. |
If my ERC claim was submitted prior to September 14, 2023, how long will I have to wait for the IRS to process it? | The IRS has stated they will review existing claims submitted before September 14, 2023, under tougher scrutiny. The IRS estimates that ERC claims that would normally take 90 days to process will now take 180 days to process. |
If my ERC claim was submitted after September 14, 2023, how long will I have to wait before it is processed by the IRS? | The IRS will not process ERC claims submitted after September 14, 2023, until they lift their moratorium. The expected time for the IRS to process new ERC claims is a minimum of nine months. This is only an estimate and is subject to change. |
What is the deadline to file for an ERC? | Businesses can file ERC claims for 2020 and 2021. For all eligible quarters of 2020, the deadline to apply for the ERC is April 15, 2024. For all eligible quarters of 2021, the deadline is April 15, 2025. |
Will my ERC claim be rejected if the IRS doesn’t review my claim until after the filing deadline? | No. The IRS will review all claims if they are submitted (postmarked on the mailer) by the filing deadline. Claims will not be rejected as late, regardless of whether the IRS reviews them after the filing deadline. |
Thank you for choosing Paylocity as your payroll tax partner. This information is provided as a courtesy, may change, and is not intended as legal or tax guidance. Employers with questions or concerns outside the scope of a Payroll Service Provider are encouraged to seek the advice of a qualified CPA, tax attorney, or tax advisor.
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