Update on ERC Processing Delays (June 2024)

There’s a new update as of Thursday, June 20, 2024 regarding the IRS’s processing of ERC claims. This comes via an announcement directly from IRS Commission Danny Werfel.

The new update is a welcomed communication for small business owners, following the initial moratorium on ERC claims processing that was announced in September of 2023.

At that time, the IRS stopped processing new ERC filings and also slowed the pace of processing for existing claims while the agency investigated what they perceived to be a high rate of fraudulent filings.

Following this investigation, the IRS has now revealed that 10-20% of claims are “high-risk” and will be rejected. The number of such claims is in the tens of thousands. Meanwhile another 60-70% of claims with an “unacceptable level of risk” will need further review and may potentially trigger an ERC audit.

The IRS aims to deny the improper claims and focus on legitimate ones, with over $2 billion in erroneous claims disallowed since last fall.

“We will now use this information to deny billions of dollars in clearly improper claims and begin additional work to issue payments to help taxpayers without any red flags on their claims,” said IRS Commissioner Danny Werfel.

Check out the bolded part of Wefel’s statement above. While its clear the number of fraudulent filings is quite high, the silver lining is that Werfel has clearly indicated that the agency does intend to continue with processing and paying out legitimate, valid ERC submissions. Unfortunately no timline was given, so be sure to check back on our blog for any future update.