IRS Crackdown on Pandemic-Era Small Business Tax Credits

The IRS will deny billions of dollars in claims for the Employee Retention Credit (ERC), a pandemic-era tax break for small businesses. The IRS found that 10% to 20% of the over 1 million claims totaling $86 billion were high-risk and will be rejected, while 60% to 70% of claims will undergo further examination. IRS Commissioner Danny Werfel emphasized denying improper claims while ensuring legitimate taxpayers receive their dues. The IRS processed 28,000 claims worth $2.2 billion and disallowed over 14,000 claims worth $1 billion. More than $2 billion in erroneous claims have been addressed, but 1.4 million unprocessed claims remain, many flagged as questionable. Taxpayers with pending claims can withdraw without penalties or interest.

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