Important ERTC Updates


In Summary:

On October 3, 2023, the Committee on Ways and Means of the U.S. House of Representatives issued THIS LETTER letter to IRS Commissioner, Daniel Werfel. The letter represents a congressional response to IRS’s September 14,2023, announcement of its moratorium on (1) processing new ERC claims and (2) its slowing of processing existing claims to enhance procedures and controls to “protect small business owners and taxpayer dollars.” In the letter, Chairman Jason Smith, Committee on Ways and Means, and Chairman David Schweikert, Subcommittee on Oversight, highlight IRS’s shortcomings in administering the ERC program. While the Chairs share the concern over fraud by ERTC mills using phone calls, texts messages, radio, and television to aggressively market the program, they admonish the IRS for fostering “an environment ripe for fraudsters” due to IRS’s “repeated changes to ERTC guidance.”

More generally, the Chairs exhibit vexation over IRS’s delay in processing legitimate claims under the auspices of guarding against fraudulent or incorrect submissions. As such, at its core, the letter attempts to hold IRS to account regarding the continuing backlog of claims, even suggesting that the IRS has not been fully transparent in calculating the number of claims in limbo. Moreover, the Chairs proclaim their concern that the IRS has been at least inconsistent, if not misleading, in pronouncing its success in processing submitted claims, stating: “It is concerning that the agency claimed a false victory over a backlog that has not been resolved.”

In closing, the Chairs request the IRS to disclose the steps it will take to expedite processing times of legitimate claims filed both before, and after the moratorium announcement. And importantly, the Chairs invite IRS to send Congress its proposal of what steps IRS will take to prevent fraud, while expediting legitimate claims because to date, “IRS has yet to engage with Congress to provide potential legislative solutions for taxpayers.”

Lifetime Advisors Comment:

Congress is frustrated with IRS’s unsuccessful, unilateral administration of the ERC program. It asserts IRS has failed to timely process legitimate claims of businesses in need, while proclaiming a false victory over the backlog. Congress chastises IRS for its repeated changes in ERTC guidance because despite all of the issues surrounding the ERTC program, “IRS has yet to engage with Congress to provide a potential legislative solution for taxpayers.” As such, the letter appears to be Congress’ invitation to IRS to work together on a viable path forward to

expedite both payment of legitimate claims, and disallowance of incorrect submissions. We hope that means that Congress is now on the job, providing congressional oversight so that, perhaps, we may have seen the last of the repeated changes to guidance. And we earnestly hope that means Congress will get engaged to uphold the primary public policy of the program: rewarding small business for keeping workers employed.

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Stacey Doege

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