What is the Employee Retention Credit (ERC)?
The ERC was designed to support businesses by providing tax credits to keep workers employed during pandemic shutdowns. However, the process has been far from smooth. Businesses that filed for these credits are facing long delays, and many are frustrated by the lack of communication from the IRS.Why Are Employers Suing the IRS?
More and more businesses are taking legal action against the IRS over delayed or denied claims. For example, an Ohio staffing company is suing for over $5 million in ERC refunds, claiming that the pandemic forced them to stop hiring. Similarly, a North Carolina daycare is fighting for nearly $400,000. These lawsuits are part of a growing trend of employers seeking refunds that they believe are rightfully theirs.The Problem with the IRS’s Handling of ERC Claims
The IRS has been overwhelmed by the number of claims, which has caused a backlog. Some employers have had to wait years for their claims to be processed. Worse, many businesses are now receiving rejection letters, some of which the IRS admits were sent by mistake. This has caused confusion and frustration for employers who need these funds.IRS Delays and Their Impact on Businesses
The delays have hurt many businesses, with some claiming that the IRS’s slow processing has made it impossible to receive refunds. One company, The Job Center LLC, has filed a lawsuit for over $5 million in refunds, arguing that it had to stop hiring during the pandemic due to government restrictions. They say the IRS has not explained the delay in processing their claim, and they are seeking interest and attorney fees on top of the refund. Similarly, Miss Marta’s Inc., a daycare, is fighting for over $394,000, claiming that the IRS failed to review their claim properly. The IRS’s delays have led to these and other businesses taking legal action to recover the money they are owed.What Are the IRS’s Reasons for the Delays?
According to the IRS, the massive number of claims, some of which were not valid, has caused the delays. The IRS also pointed out that some claims are so complicated that they require a manual review. To help manage the workload, the IRS has added more staff, but the backlog remains an issue for many businesses. The ongoing lawsuits over ERC claims show just how complicated and frustrating the process has become for businesses trying to get the help they need. While the IRS continues to work on processing these claims, many employers are still waiting for refunds or facing denials that they believe are incorrect.What is the Employee Retention Credit (ERC)?
The ERC is a tax credit designed to help businesses keep their employees during the COVID-19 pandemic.
Why are businesses suing the IRS over the ERC?
Many businesses are suing the IRS due to delays or rejections of their ERC claims, often with no clear explanation.
How long are businesses waiting for their ERC claims to be processed?
Some businesses have been waiting for years due to a backlog in the IRS’s system.
What happens if my ERC claim is denied?
If your claim is denied, you may need to appeal or file a lawsuit, depending on the situation.
Why are there so many delays with ERC claims?
The IRS has been overwhelmed with claims and has faced issues with reviewing complex cases manually, leading to delays.
