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Employee Retention Credit (ERC) Update: A Tangled Web

by Cameron Smith, CPA | August 8, 2023

If you have filed for the Employee Retention Credit (ERC), you likely have also had some IRS notices darken your doorstep.  These notices paint a concerning picture that your ERC amendment forms (941x) are on hold until further action is taken.  Despite this bleak notice, we'd like to reassure everyone who filed with us that your ERC amendments are still on the way.

The torrential flood of 941x forms cramming the mailboxes of IRS departments nationwide brought the department to its knees, to the point where even an instiution as process-driven as the IRS has been forced to deviate from its standard workflow.

Though typically hesitant to admit their department's shortcomings, even battle-hardened IRS agents have confessed over the phone that they have been processing ERC amendments with no rhyme or reason. The net result of this is that each 941x form has been handled in a manner utterly dependent on the proclivity and mood of the agent receiving the form.  Case in point: some forms were accepted, while others were rejected even amongst different quarters within the same entity. 

If only that were the end of the story.  In typical IRS fashion, additional notices were sent out in early July to each entity that had already received one a month prior.  These notices were simply follow-ups, automatically sent by the IRS to remind entities that their ERC amendments were on hold.  However, with IRS processing times being upwards of two months, these notices crossed in the mail with the new 941x forms sent in early June in response to the first notice. 

Clearly, confusion is running rampant amongst the ranks of the IRS.  Nevertheless, we will keep everyone posted on any new developments and are actively following up with the IRS to ensure that they are doing their part and that we stay ahead of any new curveballs they decide to throw at us.

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