IRS Freezes New Employee Retention Credit (ERC) Claims: What You Need to Know

IRS Freezes New Employee Retention Credit (ERC) Claims: What You Need to Know

By Fernando Jimenez

The IRS announced on September 14th that it has put a hold on processing all new Employee Retention Credit (ERC) claims through the end of 2023. The ERC is a refundable tax credit for businesses and tax-exempt organizations that had employees and were affected during the COVID-19 pandemic.

The hold is in response to aggressive marketing scams and aims to improve protections against abuse and shield businesses from predatory marketing tactics. The IRS is also working with the Justice Department to combat fraud resulting from aggressive marketing.

“The IRS is increasingly alarmed about honest small business owners being scammed by unscrupulous actors, and we could no longer tolerate growing evidence of questionable claims pouring in. … The continued aggressive marketing of these schemes is harming well-meaning businesses and delaying the payment of legitimate claims, which makes it harder to run the rest of the tax system,” said IRS Commissioner Werfel.

Next Steps

  • If you are eligible, continue to file your ERC claim, especially if you plan to claim a refund for tax year 2020 or 2021. The due date for the refund filings has stayed the same.
  • If you have already filed an ERC claim, your file is still under review.
  • If you used a firm that charged a percentage of your refund, you should have your ERC claims reviewed by a reputable CPA firm to ensure the legitimacy of the claim.
  • If you believe you filed an ineligible ERC and already received payment, the IRS is setting up a settlement program available later this fall. The program is expected to contain provisions to avoid penalties and other compliance actions.

The IRS will continue to process ERC claims filed before Thursday’s announcement, but those claims will face processing delays of up to 180 days. The IRS’s press release is available here and contains advice for taxpayers whose ERC claims are in process.

RJI CPAs Can Help

If you have been affected by ERC scams or need help reviewing your ERC filing, we can help. Reach out to Fernando Jimenez at

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