What's New at the IRS

Earlier this week the IRS provided an update on the ERC processing moratorium. The announcement stated that the moratorium will continue. For filings submitted before September 14, 2023, up to 20 percent of high-risk claims (those that appear not to meet eligibility standards) will be disallowed, while up to 20 percent of low-risk claims will be approved for refunds. As for the majority of pending claims, the IRS indicated that additional analysis will be conducted to enhance their compliance review-a familiar refrain. No claims submitted during the moratorium period will be processed, with priority given to the oldest claims first.

An IRS announcement this week regarding the processing of ERC claims, making it clear that the IRS intends to deny a majority of the pending refund claims. Additionally, it is evident that the IRS will allocate significant resources to scrutinize the promoters of ERC credits. Consequently, Congress has been asked to increase the current promoter penalty from 50% to 200% of gross income. All consultants who assisted taxpayers should take note of this development and proactively formulate a litigation defense strategy in anticipation of potential investigations by the IRS and DOJ.

The IRS recently began its first solely crypto fraud criminal case. To date, our office has seen civil tax audits in this area. Prior to this time, criminal charges were connected with other criminal investigation issues such as money-laundering. The charge is based on the failure to report proceeds. The IRS stated "it was the first time someone was charged with solely failing to report or underreporting cryptocurrency earnings and gains on their tax filings.