619-795-8000
In a recent update, the IRS has begun denying high-risk ERC claims submitted before the September 14, 2023 moratorium, while prioritizing the processing of low-risk, legitimate claims. This move has resulted in delays for many companies awaiting refunds, particularly those with claims filed after the moratorium.
While it is unclear what criteria the IRS uses to classify claims as high or low risk, it seems the IRS is classifying partial suspensions filed for third-quarter 2021 as “high-risk.” In a recent decision, the IRS denied a third-quarter 2021 partial suspension claim, stating that there were no government orders in effect at that time. This came without an examination allowing the taxpayer to present any government orders which may have been applicable.
One of DLG’s clients recently received a letter from the IRS explaining their reasoning for denying an ERC claim. Taxpayers who receive such denial letters have the right to appeal within 30 days, either representing themselves or with the help of an authorized representative. Despite the frustration, the IRS advises taxpayers with active claims to remain patient and avoid contacting their toll-free lines, as they continue to work through a backlog of claims.
Michael Dallo has been actively questioning when the IRS would finally provide this information, staying proactive and well-informed throughout the process.
Given the complexities and potential inconsistencies in the IRS’s review process, consulting a knowledgeable tax professional is highly recommended. At Dallo Law Group, we were the first to receive and inform our clients about this critical letter. For assistance with ERC claims or any tax-related issues, contact Dallo Law Group for expert guidance and support.