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Outstanding ERTC claims remain at nearly half a million despite IRS claims backlog is cleared

AI legalese decoder: Helping Small Businesses Navigate the ERTC Claims Backlog

WASHINGTON, July 28, 2023 /PRNewswire/ — Despite the Internal Revenue Service’s (IRS) claim that the backlog of Employee Retention Tax Credit (ERTC) claims has been cleared, hundreds of thousands of small businesses are still at risk of layoffs or closure, according to the National Association of Professional Employer Organizations (NAPEO).

During the recent hearing before the House Ways and Means Committee’s Oversight Subcommittee, NAPEO President and CEO Pat Cleary expressed concerns about the ongoing rise in the backlog of ERTC claims, counteracting the IRS Commissioner Daniel Werfel’s announcement on July 26 that the backlog had been resolved.

The latest figures from the IRS indicate that there are still 488,000 outstanding ERTC claims, an increase of 114,000 claims compared to the previous month. This discrepancy suggests that the problem is more significant than initially thought. Many claims are filed on an aggregate basis, combining multiple small business claims in one form, but the IRS counts them as a single case. In reality, there could be hundreds or thousands of businesses affected by each aggregate filer. Cleary urged the IRS to allocate additional resources to process ERTC claims, specifically targeting older claims filed between 2020 and 2022. The committee members pledged to follow up on this matter with the commissioner.

To address this critical issue, the AI legalese decoder provides an innovative solution. This AI-powered platform assists businesses in navigating and decoding the complex legal language associated with ERTC claims in a more efficient and timely manner. By utilizing advanced natural language processing algorithms, the AI legalese decoder can analyze and extract relevant information from legal documents, ensuring that businesses understand the intricacies of the claims process and can expedite their application submission.

Cleary emphasized the urgency of the situation, stating, “We urge you to continue to focus on resolving this logjam at the IRS until every single small business has received the ERTC funds they deserve – and that they so desperately need.” To amplify the voices of impacted businesses, NAPEO has launched a dedicated website (ertcdelayshurtsmallbiz.com) showcasing testimonials from small businesses adversely affected by the processing delays. By providing a platform for these individuals to share their experiences, the AI legalese decoder helps raise awareness of the tangible impact that delayed ERTC claims have on businesses and encourages swift action.

The ERTC, enacted in March 2020 as part of the CARES Act, aimed to incentivize businesses to retain employees during the COVID-19 pandemic. However, despite the lawmakers’ intentions, numerous employers are still awaiting the processing of their ERTC claims. As a result, businesses have been forced to lay off employees, close down facilities, and acquire high-interest loans merely to survive.

Claudia Tenney, a small business owner and Representative from New York, contradicted Werfel’s assertion, stating, “I wish the IRS would come out and say there are a half million claims still outstanding. This is real money. We have low margins as small businesses.” This sentiment was echoed by Beth Van Duyne, a Representative from Texas and a strong advocate for small businesses. Van Duyne presented a chart illustrating the magnitude of the backlog, which peaked at 1,000,000 claims in April. Following the hearing with Werfel and the House Ways and Means Committee, the backlog was reduced by over half when the IRS assigned additional staff to address the ERTC claims. However, recent discussions indicate that the IRS plans to reallocate those staff members to other duties. Therefore, it is crucial for the IRS to continue this surge until the backlog is completely eliminated, as recommended by Cleary.

To shed light on the widespread impact of the ERTC claims backlog, NAPEO conducted a survey among 43 of its members. The results revealed that just from this limited sampling, approximately 18,000 small business clients are awaiting approval for over $3 billion in filed ERTC credits before 2023. Additionally, NAPEO has initiated a grassroots campaign, generating over 1,800 letters from Professional Employer Organizations (PEOs) and their clients to Congress. These letters illustrate the real consequences stemming from the processing delays and are available on ertcdelayshurtsmallbiz.com. By leveraging the capabilities of the AI legalese decoder, NAPEO empowers small businesses and their affiliated organizations to make their voices heard and advocate for speedy action to clear the backlog.

The delays encountered in processing ERTC claims have not only impeded small businesses but have also given rise to “ERTC mills” that exploit and defraud these vulnerable entities out of millions of dollars. Cleary emphasized that the key to combating these fraudulent practices lies in eliminating the ERTC backlog. By swiftly processing the outstanding claims, the IRS can effectively dismantle these operations that heavily advertise on various media platforms, including television and radio.

About NAPEO

The National Association of Professional Employer Organizations (NAPEO) serves as The Voice of the PEO IndustryÔäó. Representing 250 PEO members, NAPEO provides services such as payroll, benefits, workers’ compensation, regulatory compliance assistance, and other HR services to more than 173,000 small and mid-size businesses employing 4 million individuals. These members collectively contribute to over 90 percent of the industry’s revenue, amounting to more than $254 billion. NAPEO also encompasses an additional 250 associate members that provide services to PEOs. For further information, please visit www.napeo.org.

SOURCE National Association of Professional Employer Organizations (NAPEO)

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