IRS Moratorium on Pandemic Credit Draws Tax Firm’s Challenge

The IRS relied on improperly implemented guidance to restrict taxpayers’ access to a pandemic relief program and should be ordered to resume processing returns that claim such relief, a tax advisory firm’s lawsuit said.

Stenson Tamaddon LLC asked the US District Court for the District of Arizona to end the IRS’s moratorium on reviewing new employee retention credit claims. The ERC was created by Congress to encourage businesses not to lay off employees during the Covid-19 pandemic by effectively refunding a portion of their payroll taxes.

The IRS denied credit claims by StenTam’s clients after improperly narrowing eligibility criteria without ...