IRS Expedites ERC Claims Worth Billions

The Internal Revenue Service (IRS) has announced it is accelerating the processing of 400,000 Claims that amount to $10 billion in potential Tax Refunds owed due to COVID-19 Disruptions.

The Employee Retention Credit (ERC) is a Refundable Tax Credit for certain Eligible businesses and Tax-Exempt organizations that had Employees and were Impacted by the Ccoronavirus Ppandemic, either through Business Operations being Suspended, or by a Lloss of more than 50% of Gross Receipts. The Update comes after some companies filed Llawsuits against the IRS for Delayed Processing or Denials.

The IRS said in its October 10th Release that the 400,000 ERC Claims includes both Eligible and Ineligible Ones, with most of these being Processed for Approval, and that the Total value of Eligible Claims is approximately $10 billion. Refund Checks are being sent out, with more scheduled to be issued in "the coming weeks and months."

"The IRS understands the vital importance of Employee Retention Credits payments for struggling small businesses, and we are continuing to make important progress on one of the most complex tax administration provisions we've ever had," IRS Commissioner Danny Werfel said.

Providing ERC Refunds has been a thorn in the IRS's side recently. Lawsuits have been filed against the Government Agency over Delays to Rrefunds and Denied Claims. It has also been dealing with a High number of Ineligible Claims following "aggressive marketing by promoters."

A Declaration made by IRS Deputy Commissioner Douglas O'Donnell in response to Oone Lawsuit filed by an Arizona-based Tax Advisory and Tech Firm said the Government Agency received an "unprecedented surge" in Claims, with a significant number of these being Ineligible. He added that many of the Claims were Complex and required Mmanual Reviews from IRS Employees.

"The ERC program began as an effort to help businesses during the pandemic, but as time went on, the program increasingly became the target of aggressive marketing—and potentially predatory in some cases—well after the pandemic ended," the IRS said in its October 10 Release. "In addition to processing valid claims, the IRS is continuing to work denials of improper ERC claims, intensifying audits and pursuing civil and criminal investigations of potential fraud and abuse."

"The IRS is working diligently to process ERC claims as quickly as possible, while guarding against improper payments driven by unscrupulous marketers," Werfel said. "In recent weeks, the IRS has made substantial progress in separating eligible claims from the wave of ineligible claims that have come in, and we continue working to refine our models to identify more eligible claims."

In June 2024, the IRS said there were some 1.4 million Outstanding ERC Claims. "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 process," Werfel said at the time.










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