IRS Halts Pandemic-Era Small-Business Tax Break Following ‘Flood’ of Potential Fraud Claims

The agency believes over $2.8 billion in claims under investigation could potentially be fraudulent and advises businesses to pause filing.

Internal Revenue Service (IRS) building in Washington, on June 28, 2023. Madalina Vasiliu/The Epoch Times

The Internal Revenue Service (IRS) has announced pausing a small-business tax credit program from the pandemic era for the remainder of the year following worries that ineligible claims are being filed.

The Employee Retention Credit (ERC) was instituted during the COVID-19 pandemic to encourage small businesses to retain their employees on payroll. It offered a refundable tax credit for businesses that paid employees while being shut down due to lockdowns and other restrictions. More than three years later, applications for ERC claims continue to pour in at the agency.