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Erin Collins, nationwide taxpayer advocate on the Taxpayer Advocate Service, speaks at a Senate Appropriations subcommittee listening to in Washington, D.C., on Could 19, 2021.
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Many taxpayers are experiencing “lengthy delays and uncertainty” amid a backlog of roughly 1.4 million pandemic-era small business tax credit claims, in line with the nationwide taxpayer advocate.
Enacted to help small companies in the course of the Covid-19 pandemic, the employee retention credit, or ERC, is price 1000’s of {dollars} per eligible worker. After a wave of “questionable claims,” the IRS stopped processing new filings in September.
However extended processing delays by the IRS are “harming taxpayers with legitimate ERC claims,” as many have already waited a 12 months or longer, Nationwide Taxpayer Advocate Erin Collins wrote in her midyear report back to Congress.
“It’s time for the IRS to be clear on how and when it plans to maneuver ahead addressing these ERC claims,” she wrote.
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There was a backlog of almost 666,000 unworked ERC claims earlier than the September moratorium, and almost all filings despatched earlier than the moratorium stay unprocessed, in line with the report. Some 85% of pending ERC claims are greater than 120 days outdated.
“The IRS is between the proverbial rock and a tough place in the case of ERC claims,” Collins stated in an announcement.
With no thorough assessment, improper ERC funds might price tens of billions of {dollars}. But when the IRS denies ERC claims and additional delays funds, “the very companies for which Congress created the ERC will probably be harmed once more,” she stated.
Within the coming weeks, Collins stated she goals to work with IRS management to speed up ERC processing of eligible claims, together with a number of 1000’s of pending circumstances with the Taxpayer Advocate Service.
Her report comes lower than one week because the IRS introduced it could deny billions of dollars’ price of “improper” ERC claims whereas prioritizing lower-risk filings.
“This is among the most advanced credit the IRS has administered, and we proceed to ask taxpayers for persistence as we unravel this advanced course of,” IRS Commissioner Danny Werfel stated in an announcement. “In the end, this era will assist us shield taxpayers in opposition to improper payouts that flooded the system and get checks to these actually eligible.”
