Frost Law
Business owners who have trusted Professional Employer Organizations (PEO) to handle their Employee Retention Credit (ERC) refund claims are finding themselves in increasingly precarious situations. Numerous lawsuits have been filed against PEOs for their mishandling of ERC claims, with some PEOs admitting that they never filed claims for credit despite their clients believing otherwise. If you filed your ERC claim through a PEO and have not received direct confirmation that your claim was submitted and received by the IRS, seeking legal guidance is strongly recommended.
A disturbing trend among PEOs is their failure to provide clients with concrete proof of ERC filings. While many PEOs send generic emails indicating the date of filing, they often fail to provide actual documentation of what was submitted or any confirmation from the IRS that a return was received. This has left many businesses operating under the false belief that their claims were likely to be processed, only to later discover they were never filed at all.
The lack of transparency extends beyond the filing process. Many PEOs have been accused of collecting IRS refunds on behalf of their clients and retaining the funds for extended periods—sometimes months or even years—before remitting the money owed. Worse still, some PEOs are failing to remit the full amount of statutory overpayment interest that the IRS includes with the refunds, effectively shortchanging their clients.
Some reasons why PEOs may be retaining ERC funds include holding the funds so the PEO can profit off of the interest, refusing to distribute the funds until the common law employer submits additional information providing eligibility, or ERC refunds being offset by tax debt owed by the PEO to the IRS. Additionally, in some instances, the PEOs are representing that they filed ERC claims, yet they did not file or only partially filed what was represented. It has been alleged that there have been instances such that PEOs have filed ERC claims incorrectly and therefore they are not processable by the IRS. If a 2020 claim is deemed non-processable, it is past the statute of limitations to correct that claim. The statute of limitations to file or correct a 2021 claim is April15, 2025. It has also been alleged that there are PEOs that are misappropriating the client’s ERC refunds or the interest payments on ERC refunds which in most instances equate to 15% or more of the total ERC credit. With many PEOs, such as Trinet, Insperity PEO, Oasis PEO, Paychex, ADP Total Source, Vensure, People PEO, Decision HR, Extensis HR, BBSI, Co Advantage, Optimum, Kimberly Group, Syndeo, Howard Leasing, Engage, FrankCrum, and JustWorks giving their clients updates that seemingly hold no value on the merit of their claims, it is imperative that clients of PEOs advocate for their claims.
Compounding the issue, PEOs continue to provide only vague, general updates about ERC claims rather than specific details relevant to individual businesses. Clients are left in the dark regarding when their claim was filed, whether it was received by the IRS, and if any further action is required.
The IRS, for its part, is unable to provide specific claim details to individual business owners because Schedules R, the tax forms used for filing ERC claims through PEOs, are submitted under the PEO’s Employer Identification Number (EIN). This means that unless the PEO grants its clients power of attorney to communicate directly with the IRS, which is highly unlikely, businesses have noway of obtaining critical updates on their claims.
If you relied on a PEO for your ERC claim, it is crucial to ensure that your claim was properly filed and that you receive the full amount owed to you. Given the mounting legal actions against PEOs, now is the time to take proactive steps to protect your business.
At Frost Law, we have experience in helping businesses navigate ERC-related disputes and hold PEOs accountable for their actions. Contact us today at (410) 497-5947 or schedule a confidential consultation.
Business owners who have trusted Professional Employer Organizations (PEO) to handle their Employee Retention Credit (ERC) refund claims are finding themselves in increasingly precarious situations. Numerous lawsuits have been filed against PEOs for their mishandling of ERC claims, with some PEOs admitting that they never filed claims for credit despite their clients believing otherwise. If you filed your ERC claim through a PEO and have not received direct confirmation that your claim was submitted and received by the IRS, seeking legal guidance is strongly recommended.
A disturbing trend among PEOs is their failure to provide clients with concrete proof of ERC filings. While many PEOs send generic emails indicating the date of filing, they often fail to provide actual documentation of what was submitted or any confirmation from the IRS that a return was received. This has left many businesses operating under the false belief that their claims were likely to be processed, only to later discover they were never filed at all.
The lack of transparency extends beyond the filing process. Many PEOs have been accused of collecting IRS refunds on behalf of their clients and retaining the funds for extended periods—sometimes months or even years—before remitting the money owed. Worse still, some PEOs are failing to remit the full amount of statutory overpayment interest that the IRS includes with the refunds, effectively shortchanging their clients.
Some reasons why PEOs may be retaining ERC funds include holding the funds so the PEO can profit off of the interest, refusing to distribute the funds until the common law employer submits additional information providing eligibility, or ERC refunds being offset by tax debt owed by the PEO to the IRS. Additionally, in some instances, the PEOs are representing that they filed ERC claims, yet they did not file or only partially filed what was represented. It has been alleged that there have been instances such that PEOs have filed ERC claims incorrectly and therefore they are not processable by the IRS. If a 2020 claim is deemed non-processable, it is past the statute of limitations to correct that claim. The statute of limitations to file or correct a 2021 claim is April15, 2025. It has also been alleged that there are PEOs that are misappropriating the client’s ERC refunds or the interest payments on ERC refunds which in most instances equate to 15% or more of the total ERC credit. With many PEOs, such as Trinet, Insperity PEO, Oasis PEO, Paychex, ADP Total Source, Vensure, People PEO, Decision HR, Extensis HR, BBSI, Co Advantage, Optimum, Kimberly Group, Syndeo, Howard Leasing, Engage, FrankCrum, and JustWorks giving their clients updates that seemingly hold no value on the merit of their claims, it is imperative that clients of PEOs advocate for their claims.
Compounding the issue, PEOs continue to provide only vague, general updates about ERC claims rather than specific details relevant to individual businesses. Clients are left in the dark regarding when their claim was filed, whether it was received by the IRS, and if any further action is required.
The IRS, for its part, is unable to provide specific claim details to individual business owners because Schedules R, the tax forms used for filing ERC claims through PEOs, are submitted under the PEO’s Employer Identification Number (EIN). This means that unless the PEO grants its clients power of attorney to communicate directly with the IRS, which is highly unlikely, businesses have noway of obtaining critical updates on their claims.
If you relied on a PEO for your ERC claim, it is crucial to ensure that your claim was properly filed and that you receive the full amount owed to you. Given the mounting legal actions against PEOs, now is the time to take proactive steps to protect your business.
At Frost Law, we have experience in helping businesses navigate ERC-related disputes and hold PEOs accountable for their actions. Contact us today at (410) 497-5947 or schedule a confidential consultation.
