Kelly stands up for small businesses & workers, questions IRS Commissioner about Employee Retention Credit delays

WASHINGTON, D.C. -- On Thursday, U.S. Rep. Mike Kelly (R-PA), Chairman of the Ways & Means Subcommittee on Tax, addressed IRS Commissioner Daniel Werfel about the agency's ongoing delay in processing the Employee Retention Credit (ERC) to businesses. The intention of the Employee Retention Credit was to help small businesses retain employees during the COVID-19 pandemic.  ERC played a critical role to get American businesses back on track from the pandemic. 

However, in recent months, the IRS cited fraudulent claims as the cause of an ERC processing backlog. Due to this delay in processing ERC claims, Rep. Kelly questioned Commissioner Werfel to clarify guidance for small businesses that are eligible for ERC and awaiting payments. Rep. Kelly stands by small businesses that filed legitimate ERC claims by the deadline and are awaiting payment from the IRS.

"I don't think there is anything more complicated than what we're talking about today when it comes to the IRS, the rules, and how it works," said Rep. Kelly. "I wish we could just get to a situation where, is this a program that runs in the best interest of the people who fund it? And that's the same people who fund everything else in our government and that's the hardworking American taxpayer."

You can WATCH and DOWNLOAD Rep. Kelly's exchange with IRS Commissioner Werfel here.

BACKGROUND

The Employee Retention Credit (ERC) was created by the Coronavirus Aid, Relief, and Economic Security (CARES) Act. It is a refundable tax credit for eligible businesses that were affected during the pandemic. The IRS has struggled processing claims in a timely manner, leaving employers and employees on hold as the agency sorts legitimate claims from ineligible or fraudulent claims.

In September 2023, the IRS announced a moratorium on the processing of new ERC claims to allow the IRS time to pursue fraudulent claims. The moratorium indicated that the processing of previously submitted ERC claims would continue but at a slower rate to ensure claims are legitimate.

Rep. Kelly supports the Tax Relief for American Families and Workers Act which changes the deadline for filing new ERC claims to January 31, 2024.  Upon enactment of this bill, qualifying claims will still be processed and paid by the IRS. In addition, this bill provides the IRS with tools to identify abuse and fraud in ERC claims to eliminate taxpayers' burdens.