Scarinci Hollenbeck wants its clients to know that if you applied for an ERC and have any doubts about the veracity of your claim, the time to act is now. The Internal Revenue Service (IRS) is carefully scrutinizing ERC claims because they have detected considerable fraud caused in part by promoters of this credit. There is currently legislation on the table to end the ERC program at the end of this month (January 2024), rather than the original date in 2025. The legislation also would extend the statute of limitations on ERC audits from five years to six years. Considering the interest and penalty that could accrue over six years, careful consideration should be given to what, if any, action should be taken at this time.
For employers who made legitimate ERC claims based on a thorough analysis of the ERC rules and their applicability to that employer, the ERC is a valid credit, designed to help those who continued to pay their employees through the pandemic, despite difficult economic challenges. If, however, you made an ERC claim and are concerned about potential future ramifications, there are currently two programs in place that you might consider taking advantage of, depending on your specific circumstances. Each program has specific qualification requirements, the details of which are not discussed here.
For companies that submitted ERC claims and have either not gotten their check from the IRS or have the check, but have not cashed it, you may be eligible to simply withdraw your claim. To date, the IRS has not put a deadline on this program, but at some point, they will end the current moratorium on processing ERC claims and get through all that have been submitted. It is unclear what the IRS will do at that point, but it could be that this opportunity will be lost then.
For companies that received the credit from the IRS, but are ineligible, you might consider the IRS Voluntary Disclosure program. Under this program, you are required to return 80 percent of the amount that you received and fully cooperate with the IRS. This means filling out a specific form that identifies all individuals and entities that helped you determine and claim the credit. THIS PROGRAM IS ONLY OPEN THROUGH MARCH 22, 2024! After the program ends, you are subject to possible audits relative to your ERC credit. If it is determined that you were not eligible for the credit, you will be required to repay 100 percent of the tax, plus interest and penalty.
Please contact us if you have any questions about this program or if you have any concerns about your ERC claim.
Nationwide Preliminary Injunction for CTA Filings Lifted
FinCEN Beneficial Owner Reporting Must be Completed by January 13 for pre-2024 Companies On December 23, 2024, the 5th Circuit Court of Appeals lifted the injunction that stayed the enforcement of the Corporate Transparency Act put into place by a federal judge in Texas. The result is that if you are required to file a […]
FinCEN Corporate Transparency Act filings shut down by the US District Court for the Eastern District of Texas
IMPORTANT UPDATE! FinCEN Corporate Transparency Act filings shut down by the US District Court for the Eastern District of Texas Under the Corporate Transparency Act (CTA), entities that were in existence before January 1, 2024 are required to file Beneficial Owner Reports (BOR) with the Financial Crimes Enforcement Network (FinCEN) before January 1, 2025. Requirements […]
New Intoxicating Hemp Law Will Dramatically Affect New Jersey Cannabis, Hemp, and Liquor Industries
On September 12, 2024, Gov. Phil Murphy signed controversial legislation that will dramatically alter New Jersey’s cannabis, hemp, and liquor industries. The new law aims to regulate the influx of intoxicating hemp products into the marketplace by bringing them under the purview of the New Jersey Cannabis Regulatory Commission (CRC). That means that edibles, THC-infused beverages, […]
Wheels Moving on Reclassification of Cannabis as AG Launches Rulemaking Process
On May 16, 2024, President Joe Biden announced that his administration is committed to reclassifying cannabis. Shortly thereafter, Attorney General Merritt Garland initiated the formal rulemaking process to move cannabis from a Schedule I to a Schedule III drug under the Controlled Substances Act (CSA). “This is monumental,” President Biden said in a video statement […]
Two PFAS Are Now Hazardous Substances under CERCLA
The U.S. Environmental Protection Agency (EPA) continues to take significant action regarding the regulation of per- and polyfluoroalkyl substances or PFAS. On April 19, 2024, the EPA released its Final Rule designating PFOA and PFOS as hazardous substances under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), which will allow EPA to use the […]
Could Your EPA Civil Enforcement Matter Turn Criminal?
Parties involved in a civil enforcement matter by the U.S. Environmental Protection Agency (EPA) could soon find themselves facing even more serious criminal liability. On April 17, 2024, the EPA’s Office of Enforcement and Compliance Assurance announced a new “Strategic Civil-Criminal Enforcement Policy” (Policy). The Policy is effective immediately and applies to all civil and […]
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New Employee Retention Credit (ERC) Program Has a Very Short Deadline
Author: Scott H. Novak
Scarinci Hollenbeck wants its clients to know that if you applied for an ERC and have any doubts about the veracity of your claim, the time to act is now. The Internal Revenue Service (IRS) is carefully scrutinizing ERC claims because they have detected considerable fraud caused in part by promoters of this credit. There is currently legislation on the table to end the ERC program at the end of this month (January 2024), rather than the original date in 2025. The legislation also would extend the statute of limitations on ERC audits from five years to six years. Considering the interest and penalty that could accrue over six years, careful consideration should be given to what, if any, action should be taken at this time.
For employers who made legitimate ERC claims based on a thorough analysis of the ERC rules and their applicability to that employer, the ERC is a valid credit, designed to help those who continued to pay their employees through the pandemic, despite difficult economic challenges. If, however, you made an ERC claim and are concerned about potential future ramifications, there are currently two programs in place that you might consider taking advantage of, depending on your specific circumstances. Each program has specific qualification requirements, the details of which are not discussed here.
For companies that submitted ERC claims and have either not gotten their check from the IRS or have the check, but have not cashed it, you may be eligible to simply withdraw your claim. To date, the IRS has not put a deadline on this program, but at some point, they will end the current moratorium on processing ERC claims and get through all that have been submitted. It is unclear what the IRS will do at that point, but it could be that this opportunity will be lost then.
For companies that received the credit from the IRS, but are ineligible, you might consider the IRS Voluntary Disclosure program. Under this program, you are required to return 80 percent of the amount that you received and fully cooperate with the IRS. This means filling out a specific form that identifies all individuals and entities that helped you determine and claim the credit. THIS PROGRAM IS ONLY OPEN THROUGH MARCH 22, 2024! After the program ends, you are subject to possible audits relative to your ERC credit. If it is determined that you were not eligible for the credit, you will be required to repay 100 percent of the tax, plus interest and penalty.
Please contact us if you have any questions about this program or if you have any concerns about your ERC claim.
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