Challenge to IRS Tax Credit Screening Tool Rejected on Appeal

A federal district court properly denied a preliminary injunction sought by two tax preparation firms that challenged the IRS’s screening program for a Covid-19 tax credit because the firms lacked standing, the Ninth Circuit held Tuesday.

In a nonprecedential decision, the US Court of Appeals for the Ninth Circuit affirmed a lower court’s refusal to grant a preliminary injunction to ERC Today LLC and Stenson Tamaddon LLC against the IRS’s automated software called Disallowance During Processing. In 2024, the agency created the DDP system, that used risk filters to issue automated, final employee retention credit denials based on eligibility ...