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IRS urged to pick up pace of tax credits for small businesses crushed by COVID

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August 14, 2024, 10:43 am

The Internal Revenue Service last week announced it will be speeding up efforts to process thousands of backlogged Employee Retention Credit (ERC) tax claims filed by small businesses that kept workers on payrolls during the COVID-19 pandemic.

Not to be confused with pandemic-era PPP loans – most of which were forgiven — employers can claim a maximum tax credit of $7,000 per employee per quarter under the ERC program, according to the IRS.

“What we have found is with greater attention on this particular program, more and more people are filing claims, and the law enables them to file those claims through April of 25, and so that’s where we are,” said Ryan Taylor, spokesman for the Coalition to Preserve American Jobs. “What’s happened with the IRS is, unilaterally, they just stopped. The moratorium was supposed to have lifted earlier this spring, and guess what? It didn’t.”

According to a recent story in the Wall Street Journal, the program has helped infuse capital to small businesses that struggled to stay afloat and retain workers during COVID shutdowns, but a massive surge in fraud created a huge headache for the IRS.

The IRS shut down new claims in September of last year, slowing payment of old claims as it tried to winnow out fraudulent claims.

“There are 180,000 to 300,000 legitimate claims waiting to be paid, and for the IRS to let those legitimate claims languish instead of letting the false claims languish, I don’t understand,” Taylor said. “It’s irresponsible. There’s got to be thousands in Colorado that are waiting to be paid.”

While the IRS is now saying it will process 50,000 payments next month, according to Politico, Taylor argues the agency needs to really ramp up the pace to save small rural Colorado businesses.

“What the coalition is aiming to do is not just raise awareness about this, but try to showcase the people, their neighbors, their small businesses in their towns,” Taylor said. “Think about what this means — obviously there’s a big impact in places like Denver and Colorado Springs – but going out to Fruita or Rifle or Sterling, if you’ve got a unique situation, a unique business, and they have to close their doors, where are you going to go to get that kind of product or service?”

“The trickle-down effect on the economy is tremendous … and they’re sending denials out instead of sending money out, which is just baffling,” Taylor added.

In a July letter to U.S. Sen. Michael Bennet, Adam County Economic Regional Partnership (AC-REP) President and CEO Lisa Hough wrote about the urgency of ERC tax credits both for her non-profit regional chamber of commerce but also the member businesses her organization supports.

“ERC would support not only businesses in our community but also our own efforts as a non-profit that didn’t seek any other COVID relief,” Hough wrote. “Also, during that time, we were part of a Professional Employer Organization, so trying to claim the ERC that is due to AC-REP has been very difficult. However, receiving our ERC would make a huge difference in our organization’s budget and ability to serve more small businesses in our region. We faced major funding declines due to COVID and other outside forces, so getting our ERC would allow us to hire another person to assist in our efforts.”

Bennet’s office declined to comment on the ERC backlog in the IRS.

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David O. Williams

Managing Editor at RealVail
David O. Williams is the editor and co-founder of RealVail.com and has had his awarding-winning work (see About Us) published in more than 75 newspapers and magazines around the world, including 5280 Magazine, American Way Magazine (American Airlines), the Anchorage Daily News (Alaska), the Anchorage Daily Press (Alaska), Aspen Daily News, Aspen Journalism, the Aspen Times, Beaver Creek Magazine, the Boulder Daily Camera, the Casper Star Tribune (Wyoming), the Chicago Tribune, Colorado Central Magazine, the Colorado Independent (formerly Colorado Confidential), Colorado Newsline, Colorado Politics (formerly the Colorado Statesman), Colorado Public News, the Colorado Springs Gazette, the Colorado Springs Independent, the Colorado Statesman (now Colorado Politics), the Colorado Times Recorder, the Cortez Journal, the Craig Daily Press, the Curry Coastal Pilot (Oregon), the Daily Trail (Vail), the Del Norte Triplicate (California), the Denver Daily News, the Denver Gazette, the Denver Post, the Durango Herald, the Eagle Valley Enterprise, the Eastside Journal (Bellevue, Washington), ESPN.com, Explore Big Sky (Mont.), the Fort Morgan Times (Colorado), the Glenwood Springs Post-Independent, the Grand Junction Daily Sentinel, the Greeley Tribune, the Huffington Post, the King County Journal (Seattle, Washington), the Kingman Daily Miner (Arizona), KUNC.org (northern Colorado), LA Weekly, the Las Vegas Sun, the Leadville Herald-Democrat, the London Daily Mirror, the Moab Times Independent (Utah), the Montgomery Journal (Maryland), the Montrose Daily Press, The New York Times, the Parent’s Handbook, Peaks Magazine (now Epic Life), People Magazine, Powder Magazine, the Pueblo Chieftain, PT Magazine, the Rio Blanco Herald Times (Colorado), Rocky Mountain Golf Magazine, the Rocky Mountain News, RouteFifty.com (formerly Government Executive State and Local), the Salt Lake Tribune, SKI Magazine, Ski Area Management, SKIING Magazine, the Sky-Hi News, the Steamboat Pilot & Today, the Sterling Journal Advocate (Colorado), the Summit Daily News, United Hemispheres (United Airlines), Vail/Beaver Creek Magazine, Vail en Español, Vail Health Magazine, Vail Valley Magazine, the Vail Daily, the Vail Trail, Westword (Denver), Writers on the Range and the Wyoming Tribune Eagle. Williams is also the founder, publisher and editor of RealVail.com and RockyMountainPost.com.