Press Releases

DENVER—U.S. Representative Brittany Pettersen (CO-07) led her Colorado Democratic colleagues in the House of Representatives in a letter to Internal Revenue Service Commissioner Daniel Werfel expressing their concerns over the current moratorium on Employee Retention Tax Credit (ERTC) claims put in place in September. Pettersen authored this letter in response to outreach from small businesses in Colorado’s 7th Congressional District about the economic burden the current pause is having on their establishments.

“Many Colorado businesses applied for and were under the impression that they were approved for an ERTC credit when their Form 941 tax credit was processed,” the members wrote. “The businesses then planned and operated under the impression that a tax credit would be issued. However, this moratorium provides significant uncertainty to these small businesses who now face potential financial distress because of governmental inaction.”

Congress created the ERTC to help small businesses by providing them funds so as not to lay off workers during the COVID-19 pandemic. However, in the face of a large backlog of cases–as well as a large number of improperly-filed, ineligible, and even fraudulent ERTC claims–the IRS announced an immediate moratorium on September 24, 2023 on processing new ERTC claims until January 1, 2024.

The full text of the letter can be found here and below.

Dear Commissioner Werfel,

We write to express concerns surrounding the current moratorium on Employee Retention Tax Credit (ERTC) claims and the potentially damaging impact this pause may place on Colorado businesses and workers.

On September 24, the Internal Revenue Service (IRS) announced an immediate moratorium on processing new ERTC claims until January 1, 2024. This prolonged waiting time to process both new and existing ERTC claims is potentially placing a significant economic burden on many small businesses in our state.

By creating the ERTC in the 2020 Coronavirus Aid, Relief, and Economic Security (CARES) Act, Congress helped small businesses by providing them funds so as not to lay off workers throughout the COVID-19 pandemic. Many Colorado businesses applied for and were under the impression that they were approved for an ERTC credit when their Form 941 tax credit was processed. The businesses then planned and operated under the impression that a tax credit would be issued. However, this moratorium provides significant uncertainty to these small businesses who now face potential financial distress because of governmental inaction.

We recognize the important purpose of the IRS’ current moratorium and thank you for the work done to address the current backlog and large number of improperly-filed, ineligible, and even fraudulent ERTC claims. It has been reported that review times for existing ERC claims will go from a standard processing goal of 90 days to 180 days, with even longer delays if the claim faces further review or audit. However, many employers in Colorado have yet to hear any update on the status of their ERTC claim. Businesses have contacted our offices regarding applications submitted in 2021 that have still yet to receive a response.

Thank you for giving your full and fair consideration of this request in accordance with all applicable rules, regulations, laws, and guidelines. We look forward to your attention to this inquiry.

Sincerely,