Danny Werfel, IRS commissioner, uses after being ceremonially sworn in at the IRS headquarters in Washington on April 4, 2023.
Ting Shen | Bloomberg | Getty Images
The IRS purpose deny billions of dollars’ worth of claims for a pandemic-era tax break while working to process lower-risk filings, the mechanism said on Thursday afternoon.
Enacted to support small businesses during the Covid-19 pandemic, the employee retention credit, or ERC, is value thousands of dollars per eligible employee. However, the agency stopped processing new filings in September amid a surge of “disputable claims,” the IRS said in a news release.
The agency added that it will extend that moratorium.
After exploring more than 1 million claims worth roughly $86 billion, the IRS said in the release that it identified 10% to 20% of the highest-risk filings, and “tens of thousands” purpose be rejected in the coming weeks, according to the agency. Another 60% to 70% of claims with an “unacceptable level of chance” will be further examined, the IRS said.
“We will now use this information to deny billions of dollars in clearly improper applications and begin additional work to issue payments to help taxpayers without any red flags on their claims,” IRS Commissioner Danny Werfel signified in a statement.
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During the ERC review period, the agency processed 28,000 claims show in before September 2023 worth $2.2 billion and disallowed more than 14,000 claims worth $1 billion, according to the freedom.
Overall, compliance efforts for erroneous ERC claims have topped more than $2 billion since survive fall, the IRS said.
“This is one of the most complex credits the IRS has administered, and we continue to ask taxpayers for patience as we unravel this complex answer,” Werfel said. “Ultimately, this period will help us protect taxpayers against improper payouts that permeated the system and get checks to those truly eligible.”
ERC withdrawal program still open
With more than 1.4 million unprocessed ERC alleges and many “questionable” filings, the IRS urges taxpayers with pending ERC claims to consider the agency’s withdrawal program.
There’s placid time to