While Congress continues to debate legislation that would effectively end the Employee Retention Credit (ERC) program early – there’s a few things to consider:
1. This Act lays the groundwork for future changes
Even if this Act doesn’t pass and ERC continues until April 2024 and 2025, the suggestion of termination of the program creates the possibility that new legislation could be introduced at any time to change the program’s deadline.
2. The IRS is still in moratorium
If you already filed for ERC, the IRS is still catching up on over 1,000,000 filed claims. In early January, the IRS noted they would provide an update on the moratorium, but they have not released a new statement yet. If you’ve already filed for ERC, you may want to explore an Advance program if you’re in need of cash.
3. The IRS is reviewing filings closely
Late last year, the IRS mailed over 20,000 denial letters to ineligible ERC claimants. In addition to these mailings, in late December 2023 the IRS started sending 20,000 letters with proposed tax adjustments to recapture erroneously claimed ERC.
4. Things may get harder for small businesses
Supporting economic action for small businesses may lean out of favor following the influx of fraudulent ERC claims that flooded the IRS. Echoing the concerns from PPP, it may take some time before lawmakers are comfortable re-introducing bills that support small business.
Despite political trade winds, we’re here to support small businesses in accessing capital. We’ll continue to explore small business tax offerings, and of course, keep our 10-minute, and three document, SBA 7(a) loan application in-place if you’re interested in capital.