IRS Denies 20,000 Pandemic Tax Credit Refund Claims

The IRS is rejecting over 20,000 refund claims for the pandemic-related employee retention credit (ERC) as part of its crackdown on "dubious" filings. The tax break, designed to support small businesses during the Covid-19 pandemic, has led to companies wrongly claiming the credit. The agency temporarily halted processing new filings in September due to a surge in questionable claims. Ineligible taxpayers will receive rejection letters, and the IRS plans to launch a voluntary disclosure program for those who wrongly claimed the credit. The agency is also rejecting filings from entities that didn't exist or lacked paid employees during the eligibility period.