COVID-19 has hit many small businesses in America hard, and Virginia's 5th District was no exception. During the COVID-19 pandemic, Congress passed the following legislation: Employee Retention Tax Credit (ERTC) It provided tax incentives for businesses to keep employees on payroll while the economy was decimated by unnecessary government-imposed lockdowns. The goal of the ERTC program was to help people keep their jobs and small businesses afloat.
In September 2023, a moratorium on the processing of new ERTC claims was declared to combat a number of claims that the Internal Revenue Service claims were fraudulent. During my time in Congress, I have consistently supported all efforts by federal agencies to reduce bloated government spending and stop taxpayers from paying unjustly. But the Biden administration has shown little to no concern about the issue. Approximately $250 billion in improper payments annually Distributed by the entire federal government.
Why did the Biden administration and IRS target only the ERTC program when they have shown no other concerns about the proverbial “waste, fraud, and abuse” that pervades so many federal programs? Small businesses that have acted in good faith, stepped up to keep their employees employed, and applied for the benefits they are legally eligible for should not be given a workaround by the IRS. Sadly, over the past year, a number of business owners in Virginia's Fifth District have contacted my office to report continued delays in processing properly filed ERTC claims.
The IRS has indicated it will continue processing the roughly 600,000 claims filed before the moratorium was announced, but it has only processed a small portion of those claims. Four years after coronavirus restrictions forced businesses to close, 1.4 million claims are still outstanding.
Some business owners have waited more than a year to receive a simple status update, let alone receive their overdue payments. Many small business owners are left in the dark about when or if their pre-forbearance claims will be processed, and are struggling to keep their businesses afloat while waiting for this promised relief. Some people do.
In an August announcement, the IRS said it would pay about 50,000 insurance claims that are considered “low risk.” Payments will start from September. That's only about 4% of the 1.4 million claims outstanding, but it's good news for these businesses and nonprofits waiting for IRS action. Unfortunately, there is little evidence that even this modest goal is being met, and most of the 50,000 claims that are said to have been prioritized remain unprocessed and remain in bureaucratic backlogs. Masu. Cumulative delays and accrued interest have left eligible businesses with more than $100 billion in back pay.
In a recent letter to IRS Commissioner Danny Wuerffel, several colleagues and I called on the IRS to be transparent with employers who are waiting on promised payments. We request that you provide a deadline for promised refunds for identified low-risk ERTC claims, as well as a public schedule and specific criteria by which all other outstanding ERTC claims will be processed. I did.
Taking these common sense steps is the least the IRS can do for small businesses that are the lifeblood of our communities.
Bob Good represents Virginia's 5th District.
