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IRS urged to pick up pace of tax credits for small businesses crushed by COVID
The Internal Revenue Service last week announced it will be speeding up efforts to process thousands of backlogged Employee Retention Credit (ERC) tax claims filed by small businesses that kept workers on payrolls during the COVID-19 pandemic.
Not to be confused with pandemic-era PPP loans – most of which were forgiven — employers can claim a maximum tax credit of $7,000 per employee per quarter under the ERC program, according to the IRS.
“What we have found is with greater attention on this particular program, more and more people are filing claims, and the law enables them to file those claims through April of 25, and so that’s where we are,” said Ryan Taylor, spokesman for the Coalition to Preserve American Jobs. “What’s happened with the IRS is, unilaterally, they just stopped. The moratorium was supposed to have lifted earlier this spring, and guess what? It didn’t.”
According to a recent story in the Wall Street Journal, the program has helped infuse capital to small businesses that struggled to stay afloat and retain workers during COVID shutdowns, but a massive surge in fraud created a huge headache for the IRS.
The IRS shut down new claims in September of last year, slowing payment of old claims as it tried to winnow out fraudulent claims.
“There are 180,000 to 300,000 legitimate claims waiting to be paid, and for the IRS to let those legitimate claims languish instead of letting the false claims languish, I don’t understand,” Taylor said. “It’s irresponsible. There’s got to be thousands in Colorado that are waiting to be paid.”
While the IRS is now saying it will process 50,000 payments next month, according to Politico, Taylor argues the agency needs to really ramp up the pace to save small rural Colorado businesses.
“What the coalition is aiming to do is not just raise awareness about this, but try to showcase the people, their neighbors, their small businesses in their towns,” Taylor said. “Think about what this means — obviously there’s a big impact in places like Denver and Colorado Springs – but going out to Fruita or Rifle or Sterling, if you’ve got a unique situation, a unique business, and they have to close their doors, where are you going to go to get that kind of product or service?”
“The trickle-down effect on the economy is tremendous … and they’re sending denials out instead of sending money out, which is just baffling,” Taylor added.
In a July letter to U.S. Sen. Michael Bennet, Adam County Economic Regional Partnership (AC-REP) President and CEO Lisa Hough wrote about the urgency of ERC tax credits both for her non-profit regional chamber of commerce but also the member businesses her organization supports.
“ERC would support not only businesses in our community but also our own efforts as a non-profit that didn’t seek any other COVID relief,” Hough wrote. “Also, during that time, we were part of a Professional Employer Organization, so trying to claim the ERC that is due to AC-REP has been very difficult. However, receiving our ERC would make a huge difference in our organization’s budget and ability to serve more small businesses in our region. We faced major funding declines due to COVID and other outside forces, so getting our ERC would allow us to hire another person to assist in our efforts.”
Bennet’s office declined to comment on the ERC backlog in the IRS.
David O. Williams
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