NAPEO CALLS ON IRS TO PROCESS LEGITIMATE ERTC CLAIMS AS BACKLOG BREACHES ONE MILLION

Outstanding ERTC Claims Set New Record High

ALEXANDRIA, Va., Dec. 4, 2023 /PRNewswire/ -- Thousands of small businesses are at risk of financial harm or closure if the Internal Revenue Service (IRS) does not quickly process its now-record high backlog of legitimate Employee Retention Tax Credit (ERTC) applications, the National Association of Professional Employer Organizations (NAPEO) said Monday.

NAPEO supported the IRS's announcement on September 14 that it would pause the processing of new ERTC claims through at least the end of this year, with the belief that it would enable the agency to focus on weeding out fraudulent claims and processing the legitimate claims, like those filed by PEOs on behalf of their clients. 

The IRS's own figures show that as of November 29, the number of outstanding ERTC claims now stands at 1,010,000, more than 370,000 more than when the moratorium was announced and eclipsing the 1,000,000-backlog high seen this spring. PEOs file on behalf of dozens, hundreds or even thousands of clients, Yet the IRS counts each PEO claim as one. If each of these small business claims was counted individually, the ERTC backlog figure would likely be even higher.

"The backlog has consistently moved in the wrong direction, and we've now reached a sobering new record," said NAPEO President and CEO Pat Cleary. "We support the IRS's decision to focus on legitimate claims. We need it to now execute on that promise before this crisis spirals even further out of control."

The House Ways and Means Committee this fall sent a letter to IRS Commissioner Daniel Werfel cautioning that further inaction during this dedicated catch-up period will only exacerbate the crisis that has lasted months, in some cases, years for tens of thousands of small and mid-size businesses.

For more background on the ERTC and NAPEO's efforts to clear the backlog, click here.

About NAPEO
The National Association of Professional Employer Organizations (NAPEO) is The Voice of the PEO Industry™. NAPEO's 230 PEO members provide payroll, benefits, workers' comp, regulatory compliance assistance, and other HR services to more than 208,000 small and mid-size businesses employing 4.5 million people. Our members account for more than 90 percent of the industry's $358 billion in revenue. An additional 250 companies that provide services to PEOs are associate members of NAPEO. For more information, please visit www.napeo.org.

SOURCE National Association of Professional Employer Organizations (NAPEO)