“We’re still waiting for the IRS to give us the settlement process for employers who got the checks and cashed them,” Pon added. “In many cases, the money is gone: It’s been spent and also they paid a substantial amount to these ERC mills.”
For clients with legitimate ERC claims, Pon suggests sending the claims to the IRS now and getting proof of delivery to the IRS. He added that the statute of limitations for the ERC for 2020 is April 15, 2024, and for 2021 it’s April 15, 2025.
Pon said that if the ERC claim was filed by a third party, clients need a copy of the IRS Form 941X plus all the workpapers.
“For most ERC mills, there are no workpapers,” Pon added. “The tax professional should review these claims to make sure the employer qualified for the ERC and the calculations were done correctly. Unfortunately, most of the ERC mills basically said everyone qualified and did not do the proper analysis.”