1. IRS Accelerates ERC Claims Processing
The IRS announced it is accelerating its efforts to process approximately 400,000 pending Employee Retention Credit (ERC) claims, with a total value of around $10 billion. The IRS had paused processing new claims due to concerns about fraud in the program, but the agency is now working to expedite legitimate claims. Tax professionals are urged to ensure clients’ claims meet all eligibility requirements as the IRS increases its scrutiny on ERC filings.
Why It Matters
The ERC program has provided crucial financial support for many businesses during the pandemic. However, the heightened scrutiny on claims, coupled with the IRS’s efforts to detect and prevent fraud, means tax professionals must take extra care in preparing accurate and compliant filings. Any errors could lead to delays or even disqualification of claims.
Actionable Steps
- Review Client Eligibility: Reassess your clients’ eligibility for the ERC to ensure they meet all the requirements, reducing the risk of claim rejections.
- Prepare for Increased Scrutiny: Ensure that all documentation is accurate and up-to-date, as the IRS is reviewing claims more thoroughly.
- Stay Updated on IRS Guidance: Monitor any updates from the IRS regarding ERC processing and fraud prevention measures to stay ahead of potential challenges.
2. IRS Assistance for Hurricane Victims: Extended Deadlines
The IRS has extended the filing and payment deadline to May 1, 2025, for individuals and businesses impacted by hurricanes Helene and Milton. This relief applies to tax filings, estimated tax payments, and other deadlines for those in federally declared disaster areas. The extension offers taxpayers more time to focus on recovery efforts without immediate tax obligations.
Why It Matters
Tax professionals need to be aware of these extensions to ensure their clients take full advantage of the additional time to file and pay taxes, reducing their stress during the recovery process.
Actionable Steps
- Identify Affected Clients: Pinpoint clients in disaster zones and notify them about the extended deadlines.
- Adjust Filing Schedules: Work with clients to develop a revised timeline for filing and payment that fits within the new deadlines.
- Coordinate with Relief Efforts: Help clients understand how disaster-related tax relief can further assist them as they navigate recovery.
3. IRS Warns of Charity Scams Following Hurricanes
Following hurricanes Helene and Milton, the IRS has issued a warning about charity scams aimed at exploiting people’s goodwill. Fraudulent organizations are posing as legitimate charities, and the IRS is urging taxpayers to verify donation recipients through official tools before contributing.
Why It Matters
Tax professionals can help clients avoid falling victim to scams by educating them on how to verify legitimate charities. Since charitable donations are tax-deductible only if made to recognized organizations, it's important to ensure clients make informed decisions when donating.
Actionable Steps
- Educate Clients: Inform clients about the IRS’s tools for verifying charities, like the Tax-Exempt Organization Search.
- Encourage Caution: Advise clients to research charities before making donations and to avoid responding to unsolicited requests for contributions.
- Document Donations: Make sure clients properly document their charitable contributions to maximize deductions at tax time.