IRS RESPONSE TO RECOMMENDATION: ​The IRS has trained all employees who are working on Employee Retention Credit (ERC) matters, and the IRS agrees that all employees who are newly assigned to work ERC will receive timely and appropriate training to enable them to complete their duties.

The IRS disagrees with the recommendation to post IRS ERC training materials on irs.gov. Training material is based on publicly available information, such as FAQs and Notices that are available on irs.gov.

CORRECTIVE ACTION: All employees who are newly assigned to work ERC will receive timely and appropriate training to enable them to complete their duties.

TAS RESPONSE: The IRS’s commitment to adequately train employees who work ERC cases will ensure that taxpayer rights are being fully protected, and that taxpayers are interacting with a competent and fully informed IRS employee when trying to resolve any issues regarding their ERC claim. The IRS could reassure taxpayers that employees are adequately trained on ERC-related matters, giving them confidence in the process, and that their rights are being protected, by posting ERC training material on its website. Since the IRS stated their trainings are developed from publicly available materials, it seems there would be no restrictions to making its ERC training materials available to the public.

Additionally, there continue to be ERC workstreams that do not have any online FAQs or IRM procedures, such as ERC streamline audits. The lack of publicly available information regarding case procedures affects both a taxpayer’s ability to know how to respond and TAS’s ability to advocate for these taxpayers.

ADOPTED, PARTIALLY ADOPTED or NOT ADOPTED: Partially Adopted

OPEN or CLOSED: Open

DUE DATE FOR ACTION (if left open): 12/31/2025

IRS RESPONSE TO RECOMMENDATION: ​​Processing ERC claims has been a priority within the IRS. The IRS has taken a multi-pronged approach to ERC processing including digitizing and assessing the risk of unprocessed claims, processing lower risk claims, disallowing higher risk claims, launching voluntary compliance initiatives including Withdrawal and Voluntary Disclosure Programs, and additional compliance initiatives such as audits and investigations. While we cannot commit to a specific timeframe for processing the remaining inventory, the IRS plans to continue addressing ERC claims while balancing resources and needs of taxpayers.

CORRECTIVE ACTION:While we cannot commit to a specific timeframe for processing the remaining inventory, the IRS plans to continue addressing ERC claims while balancing resources and needs of taxpayers.

TAS RESPONSE: The IRS has resumed processing ERC claims, but taxpayers still have no firm commitment from the IRS as to when it will complete processing of these claims, and some taxpayers have waited months – or even more than a year – to have their ERC claim processed by the IRS. Taxpayers deserve a firm commitment from the IRS as to when it intends to complete processing of the remaining ERC claims.

ADOPTED, PARTIALLY ADOPTED or NOT ADOPTED: Partially Adopted

OPEN or CLOSED: Open

DUE DATE FOR ACTION (if left open): Ongoing

IRS RESPONSE TO RECOMMENDATION: Currently, the IRS prioritizes the transcription, review, and risk assessment of ERC claims for taxpayers who report they are experiencing financial hardships. Low risk ERC claims are processed expeditiously, and claims warranting examination are started expeditiously.

CORRECTIVE ACTION: Currently, the IRS prioritizes the transcription, review, and risk assessment of ERC claims for taxpayers who report they are experiencing financial hardships. Low risk ERC claims are processed expeditiously, and claims warranting examination are started expeditiously.

The IRS stated this recommendation will be completed December 31, 2026.

TAS RESPONSE: It is reassuring that the IRS understands the significance of the ERC and how it offers critical financial support for some businesses experiencing financial hardship. Many of these businesses have already waited far too long to receive their ERC. Thus, TAS is encouraged that the IRS has agreed to prioritize the ERC claims of businesses that are experiencing economic hardship.

ADOPTED, PARTIALLY ADOPTED or NOT ADOPTED: Adopted

OPEN or CLOSED: Open

DUE DATE FOR ACTION (if left open): 12/31/2026

IRS RESPONSE TO RECOMMENDATION: Absent legislative changes, the IRS plans to resume processing of ERC claims without regard to moratoria and with a focus of working cases on a first in, first out basis, while prioritizing hardship cases.

CORRECTIVE ACTION: Absent legislative changes, the IRS plans to resume processing of ERC claims without regard to moratoria and with a focus of working cases on a first in, first out basis, while prioritizing hardship cases.

TAS RESPONSE: The IRS’s move towards addressing ERC claims on a first in/first out basis without regard to the moratorium is an encouraging step towards the IRS fully completing its processing of ERC claims. To ensure taxpayers are fully aware of this phase of processing, the IRS should announce it is officially ending the moratorium, just as it announced previously when the moratorium was implemented. Without this IRS announcement, taxpayers may not be fully aware of the IRS’s resumption of ERC processing, and the IRS may not be fully observing the taxpayer’s right to be informed.

ADOPTED, PARTIALLY ADOPTED or NOT ADOPTED: Partially Adopted

OPEN or CLOSED: Open

DUE DATE FOR ACTION (if left open): 12/31/2025

IRS RESPONSE TO RECOMMENDATION:The ERC claims call for a variety of treatments including allowance, disallowance, audit, etc. Each treatment calls for different actions and requires different timeframes for completion. Reporting general timeframes broadly provides an inaccurate representation of the timing and will confuse the taxpayer and practitioner communities.

CORRECTIVE ACTION: N/A

TAS RESPONSE: Since the inception of the ERC, taxpayers and practitioners have been confused and often felt in the dark about the IRS’s stop/start approach to processing ERC claims. It is difficult to understand how providing taxpayers and practitioners with more information about IRS processing of ERC claims, even if just general information, could do anything other than alleviate this confusion for taxpayers. The IRS should always strive to provide taxpayers and practitioners as much information as possible so they can fully understand the efforts the IRS is making to work and process ERC claims. Additionally, this would serve to reduce the number of phone calls where taxpayers reach out to the IRS for more information regarding the processing of their claims. This level of transparency would reassure taxpayers and the public at large that the IRS’s actions match its words, and it is moving as quickly as possible to process ERC claims while protecting taxpayer rights.

ADOPTED, PARTIALLY ADOPTED or NOT ADOPTED: Not Adopted

OPEN or CLOSED: Closed

DUE DATE FOR ACTION (if left open): N/A

IRS RESPONSE TO RECOMMENDATION: Responses and records provided in response to claims disallowed absent an examination will be considered by a compliance function prior to routing to the Independent Office of Appeals (Appeals). If the compliance function does not change its determination after review, the IRS will route the claim disallowance (with the response and associated documents) to Appeals. Prior to routing to Appeals, the IRS will implement an additional step where the compliance function will communicate, via correspondence, a more detailed disallowance explanation subsequent to review of the taxpayer’s response.

This correspondence will acknowledge receipt of the information provided but will advise that the disallowance stands and two-year period to file suit stated in the previously issued Letter 105-C remains the same. To protect the taxpayer’s interests given the two-year refund statute expiration date limitation, Compliance will not hold the claim to await additional information, but rather will continue routing to Appeals. The taxpayer will receive the Letter 86C separate from this correspondence.

In accordance with existing Appeals procedures, if the taxpayer provides additional information subsequent to routing to Appeals, the case will be sent back for compliance consideration as needed.

CORRECTIVE ACTION: Prior to routing to Appeals, the IRS will implement an additional step where the compliance function will communicate, via correspondence, a more detailed disallowance explanation subsequent to review of the taxpayer’s response.

This correspondence will acknowledge receipt of the information provided but will advise that the disallowance stands and two-year period to file suit stated in the previously issued Letter 105-C remains the same. To protect the taxpayer’s interests given the two-year refund statute expiration date limitation, Compliance will not hold the claim to await additional information, but rather will continue routing to Appeals. The taxpayer will receive the Letter 86C separate from this correspondence.

TAS RESPONSE: The IRS is adding additional time to the review process by not allowing taxpayers an additional opportunity to provide more information after IRS Compliance has reviewed and upheld the disallowance, and prior to the case being forwarded to Appeals. In fact, the IRS itself recognized in its response, if taxpayers provide additional information after the case has been transferred from Compliance to Appeals, the case will have to be sent back to Compliance prior to any Appeals review. This back-and-forth between Appeals and Compliance will unnecessarily add additional time to reviewing taxpayers’ responses to disallowance notices, thereby risking the expiration of the statutory two-year IRC § 6532 period. Therefore, it makes the most sense for the IRS to allow taxpayers a period of time in which they can provide additional information if the IRS’s review results in a continued disallowance due to lack of substantiation.

ADOPTED, PARTIALLY ADOPTED or NOT ADOPTED: Partially Adopted

OPEN or CLOSED: Open

DUE DATE FOR ACTION (if left open): 9/30/2025

IRS RESPONSE TO RECOMMENDATION: Requesting books and records to support a claim may constitute an audit/examination. As such, unless the IRS has the intent to audit a claim, it is not appropriate to request books and records.

The IRS will consider taxpayer and practitioner feedback prior to expanding initial disallowance issuances absent examination.

CORRECTIVE ACTION: N/A

TAS RESPONSE: The IRS should use the scoring of ERC claims as a jumping off point to work with taxpayers to identify any possible deficiencies in their ERC claims. Although the IRS’s concern about requesting books and records from a taxpayer without initiating an audit is valid, it should explore the possibility of providing taxpayers an opportunity to work with the IRS and voluntarily provide the IRS with documentation to substantiate the claim prior to issuing a notice of disallowance, thereby avoiding a lengthy review process while the two-year period for the taxpayer to file suit in Federal court is running.

ADOPTED, PARTIALLY ADOPTED or NOT ADOPTED: Not Adopted

OPEN or CLOSED: Closed

DUE DATE FOR ACTION (if left open): N/A

IRS RESPONSE TO RECOMMENDATION:The IRS stated this recommendation has already been implemented.

The IRS agrees that ERC taxpayers could be allowed to utilize Fast Track Settlement processes on a case-by-case basis. However, Fast Track should not be offered in all situations.

There are multiple exclusions from Fast Track in Section 4.02 in Rev. Proc. 2017-25 that must be considered. See also IRM 8.26.2.6 and Publication 5022 for more on the exclusions. For example, cases worked in Field Exam are eligible for and considered on a case-by-case basis for the Fast Track Settlement process, but correspondence examination cases worked solely at a Campus are specifically excluded from the Fast Track Settlement process. There may also be cases where allowing Fast Track would not be consistent with sound tax administration.

If Field Exam and the taxpayer agree to pursue Fast Track Settlement, Appeals will consider the application on a case-by-case basis and generally will agree to serve as mediator in the Fast Track proceeding provided that the issue is fully developed and that the issue is not subject to the exclusions set forth in Rev. Proc. 2017-25, Section 4.02, and IRM 8.26.2.6.

CORRECTIVE ACTION: N/A

TAS RESPONSE: TAS recognizes that Fast Track is not available to all taxpayers, and that certain exclusions apply. However, it would benefit both the IRS and the taxpayer to allow Fast Track on ERC where possible, and to take a broad view of making Fast Track available to taxpayers and practitioners in ERC cases. Considering the IRS’s lengthy ERC review process, Fast Track could be a beneficial option to ensure taxpayer’s cases are heard by Appeals within the statutory two-year period. Additionally, resolution of the ERC dispute via Fast Track would eliminate the use of further resources by both the IRS and the taxpayer to resolve the issue. Appeals’ Fast Track comes with a myriad of benefits to both the IRS and the taxpayer and the IRS should make it broadly available in the context of ERC whenever possible.

ADOPTED, PARTIALLY ADOPTED or NOT ADOPTED: Partially Adopted

OPEN or CLOSED: Closed

DUE DATE FOR ACTION (if left open): N/A

IRS RESPONSE TO RECOMMENDATION: The IRS’s internal stakeholders are collaborating to develop intake and storage capabilities for direct deposit information. This will provide the capability to issue and reissue refunds or future advance payments. We will partner with the Bureau of the Fiscal Service (BFS) to develop additional programming allowing all taxpayers to opt in for direct deposit refunds. The IRS, and the BFS, will need to develop new processes to accommodate taxpayer requests including notifications, frozen accounts, and online account updates. The IRS will deliver these capabilities iteratively. Additionally, we are pursuing functionality allowing taxpayers to update direct deposit information using Individual Online Account, to allow the BFS to verify the account information and issue direct deposit refunds to the updated account. Implementation is contingent on available funding.

Phased implementation is targeted to begin in June 2026.

CORRECTIVE ACTION: The IRS’s internal stakeholders are collaborating to develop intake and storage capabilities for direct deposit information. This will provide the capability to issue and reissue refunds or future advance payments. We will partner with the Bureau of the Fiscal Service (BFS) to develop additional programming allowing all taxpayers to opt in for direct deposit refunds. The IRS, and the BFS, will need to develop new processes to accommodate taxpayer requests including notifications, frozen accounts, and online account updates. The IRS will deliver these capabilities iteratively. Additionally, we are pursuing functionality allowing taxpayers to update direct deposit information using Individual Online Account, to allow the BFS to verify the account information and issue direct deposit refunds to the updated account. Implementation is contingent on available funding.

TAS RESPONSE: As the IRS continues to embrace a more electronic and efficient environment, it needs to provide taxpayers with more opportunities to have checks directly deposited, which reduces the risk of a bad actor stealing the refund. The IRS is taking positive steps in this direction but must work quickly with BFS to ensure taxpayers can easily opt in to a direct deposit option when requesting that a stolen check be replaced. IRS and BFS enhancement of direct deposit options will better protect both taxpayers and the government fisc.

ADOPTED, PARTIALLY ADOPTED or NOT ADOPTED: Partially Adopted

OPEN or CLOSED: Open

DUE DATE FOR ACTION (if left open): 06/30/2026