When the Pennsylvania state and local governments forced businesses to shut their doors and turn away customers during the pandemic, businesses did it. When the federal government asked businesses to keep employees on payroll to avoid waves of mass layoffs, businesses did that too. But that doesn’t mean it was easy–businesses lost money and some never reopened. Those who weathered the storm were forced to take loans from local banks, borrow money from family, or dip into their personal savings to keep members of their communities employed. Despite everyone’s best efforts, over 166,000 Pennsylvania small business jobs were lost in the first year of the pandemic.

To lessen the burden, Congress included the Employee Retention Tax Credit (ERC) in the 2020 Coronavirus Aid, Relief, and Economic Security (CARES) Act and it passed with overwhelming bipartisan support.

Under federal law, businesses can claim the ERC for 2020 and parts of 2021 if they kept employees on payroll during the pandemic’s most challenging periods. The ERC is not a new policy idea and it’s worked before. In fact, Congress specifically leverages the ERC during times of major economic crisis to keep businesses afloat, and was successfully implemented in the wake of Hurricane Katrina.

Unfortunately, this latest iteration has been characterized by missteps and errors on the part of the Internal Revenue Service (IRS). With more employees than the Department of State, Defense, and Customs and Border Protection, the IRS should be more than capable of delivering ERC relief to businesses in a timely manner.

Fast forward to September 2023, and instead of efficiently administering the program, the IRS announced a moratorium on processing new claims. The result is 1.4 million claims languishing in backlog. Each valid claim represents a business in limbo and a promise made but not kept.

Small businesses are continuing to face the most challenging economic environment in a generation. The highest interest rates in decades, limited access to capital, and labor shortages are hurting businesses, many of which are still recovering from the pandemic. The last thing America’s small businesses need is an IRS that’s holding onto the tax credits it owes them. It adds strain to their financial situation and prevents them from being able to adequately plan for the future.

In June, the IRS sorted backlogged ERC claims into three separate categories of ineligibility: low-risk, unacceptable risk, and high-risk claims. According to the IRS’ data, there are at least 150,000-300,000 low-risk claims in backlog. The IRS told the public it would process and pay those low-risk claims this summer. Then, this summer the IRS announced they would delay processing those claims until the fall while issuing denial letters to the “high risk” category. The only problem was they sent thousands of denial letters to legitimate claimants, as reported by the Wall Street Journal, dealing many small business owners another setback in this never-ending nightmare.

The erroneous denial letters shared by small businesses contained obvious mistakes. Some were denied because the IRS said they were operating their business when they were in fact shut down. As the Sun-Gazette shared in its recent editorial, other denial letters said businesses did not meet the standard for decline in gross receipts, but the IRS relied on annual data even though eligibility is determined quarterly. These basic mistakes combined with long and burdensome delays have caused serious concern among employers, tax experts, and elected officials.

It’s not easy to get the two parties to agree on much these days. So, we should all take notice of the fact that Senators Tommy Tuberville (R-AL), Mark Warner (D-VA) and Time Kaine (D-VA), and Representative Claudia Tenney (R-NY), have all penned letters to IRS Commissioner Danny Werfel to demand answers for delays in the ERC program and call out the negative impact the IRS’ moratorium on the ERC program is having on American job creators by slow-rolling so many claims.

The good news is that Pennsylvanians have representation in Washington. Senator Bob Casey sits on the Senate Committee on Finance which means he has oversight responsibilities for the IRS – he has the power to hold Commissioner Werfel accountable for the failure of the ERC program over the past year and the harm that it has caused to Pennsylvania businesses.

I am therefore hopeful that Senator Casey will reach out to the IRS on behalf of Pennsylvanians and ask them to immediately begin paying out low-risk ERC claims and accelerate the processing of 1.4 million claims in backlog. It’s time to finish the job.

Ryan Taylor is the spokesperson for the Coalition to Preserve American Jobs (CPAJ), a national group comprised of associations representing small businesses and responsible tax professionals, and CEO of 440 Strategies.