IRS ERC Refund Payments to Restart September 2024
Published on by Cheryl Ganim in COVID-19
ERC refunds
The IRS announced it’s moving forward with processing Employee Retention Credit (ERC) claims filed between September 14, 2023, and January 31, 2024.
The ERC was designed to help businesses retain their employees during pandemic shutdowns. However, aggressive promoters induced taxpayers to file thousands of improper claims. In response to a large number of erroneous ERC claims, the IRS imposed a moratorium on processing ERC claims submitted after September 14, 2023, so it could determine which already-filed ERC claims were improper.
The IRS identified 50,000 valid ERC claims and is beginning payment processing in the coming weeks. The IRS projects these payments will begin in September with additional payments going out in subsequent weeks. The IRS anticipates adding another large block of low-risk claims for processing and payment in the fall.
As the IRS begins to process additional claims, the agency reminds businesses that they may receive payments for some quarters while it continues to review other periods for eligibility.
ERC denials and appeals
The IRS has sent 28,000 letters to businesses disallowing improper ERC claims. According to IRS estimates, disallowing these claims will prevent up to $5 billion in improper payments. Many of the IRS ERC denial letters have deficiencies such as inaccurate or inapplicable bases for disallowing the claim, and an insufficient or completely omitted notice of administrative appeals rights.
Denials of ERC claims can be appealed by responding to the address on the denial letter, even if the denial letter doesn’t address appeal rights. The Taxpayer Bill of Rights protects the right to appeal an IRS decision in an independent forum irrespective of whether the IRS provided appeals language in the letter. A taxpayer typically has thirty days to request an appeal by filing a written protest with the office provided in the ERC disallowance letter.
Taxpayers who challenge the disallowance notice have two years from the date the notice of claim disallowance is mailed to file suit in a U. S. district court or the U.S. Court of Federal Claims. When disputing a refund denial within the two-year period, if the IRS has not issued a payment or allowed a credit before the expiration of the two-year period, the IRS is prohibited from paying the refund or allowing the credit. The payment must be made (or credit allowed) during the two-year window unless that window is extended by an Agreement to Extend the Time to Bring Suit (IRS Form 907). The Agreement must be executed before the two-year window expires.
Related content
For some additional background, you might be interested in the IRS’s voluntary withdrawal program for organizations having second thoughts about their eligibility for the ERC, or in the Top 7 Watch-Outs for ERC claims. Our COVID-19 A-Team members Andy Bertke and Ryan Lauer also put together a 20-minute master class video on the ERC. Finally, if you qualified for the ERC, don’t forget about taxable interest income on the funds. Here’s what you need to know.
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