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Fighting the Fraud: Breaking Down the ERC Moratorium

by Wes Read, CPA, CFP® | September 15, 2023

Effective 9.14.23, the IRS has announced an immediate halt to the processing of new ERC filings. This moratorium has been put in place to help the IRS better target fraudulent ERC filings, which have risen to alarming rates since the program's inception.

With a stronger focus on compliance, this moratorium is intended to 1) track down wrongfully filed ERC claims and 2) enforce the necessary repercussions. While all wrongfully filed ERC claims have to be paid back in full, more serious cases of scamming can - and already have - resulted in actual convictions and jail time. Yup, you read that right. The IRS is not messing around when it comes to ERC fraud.

If you submitted an ERC report before the moratorium was put in place, processing times will increase from 90 to 180 day. And while payouts will still continue, they will be done at a much slower pace. 

As stated by IRS Commissioner Danny Werfel, "The IRS is increasingly alarmed about honest small business owners being scammed by unscrupulous actors, and we could no longer tolerate growing evidence of questionable claims pouring in. The further we get from the pandemic, the further we see the good intentions of this important program abused.

The continued aggressive marketing of these schemes is harming well-meaning businesses and delaying the payment of legitimate claims, which makes it harder to run the rest of the tax system. This harms all taxpayers, not just ERC applicants. The moratorium will help protect taxpayers by adding a new safety net onto this program to focus on fraudulent claims and scammers taking advantage of honest taxpayers.” 

For PracticeCFO clients that filed their ERC with us, do not be alarmed. This article is simply an FYI. One of the IRS’s top tactics for business owners to avoid being an ERC scam victim is to stick with a trusted tax professional. We are exactly that. Rest assured, PracticeCFO is not only fully certified to file these claims, but puts the utmost care in ensuring that everything that goes out our door is legal, legitimate, and fully compliant. We don't take our role as trusted advisors lightly. You will always be in safe hands with us.

For dentists that are getting bombarded with ERC promotions and advisements, proceed with caution. This chart offers a comprehensive rundown on checking ERC eligibility. And better yet (because we know determining eligibility in the first place can be complex), it offers IRS-backed resources on how to ensure the professional filing for you is trusted and legitimate. 

For the full IRS statement regarding the moratorium, please refer to this article

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