The IRS is paying out more claims for the Employee Retention Credit (ERC) program while intensifying its audits and investigations into potential fraud and abuse.
The IRS has sent out 28,000 disallowance letters to businesses with high-risk claims, preventing up to $5 billion in improper payments.
The agency has also identified 50,000 valid ERC claims and is moving them into the payment processing pipeline.
The complexity of the ERC has led the IRS to take a methodical approach to balance the needs of businesses with legitimate claims against the wave of improper claims.
With the recent issuance of 28,000 disallowance letters, the IRS said it is aware of concerns raised by tax professionals about potential errors.
“While we are still evaluating the results of this first significant wave of disallowances in 2024, early indications indicate errors are relatively isolated and that more than 90% of disallowance notices were validly issued,” the agency said in a news release.