In a major score for pandemic-era business relief seekers, Ostroff Injury Law PC has secured a favorable settlement in its $790,000 lawsuit against the Internal Revenue Service, which the firm accused of delaying payment of vital worker tax credits. The win comes amid an IRS backlog crisis that has left thousands of businesses in bureaucratic limbo.
The case was officially dismissed Friday by the U.S. District Court in Pennsylvania, following a confidential agreement between the IRS and Ostroff. Though specifics of the deal weren’t made public, firm attorney Nate Pollock of Southbank Legal described the outcome as “very favorable.”
A Clash Over Pandemic Promises
Ostroff’s legal challenge, filed in August 2023, was born out of frustration shared by countless employers across the country: the IRS’s paralyzing delay in processing Employee Retention Credit (ERC) claims. These credits—created under the Coronavirus Aid, Relief and Economic Security (CARES) Act in 2020—were designed to incentivize businesses to keep staff on payroll during COVID-19 lockdowns.
The firm filed for the credits through amended returns about seven months prior to suing, but said it was stonewalled by the agency. The suit became part of a growing wave of litigation against the IRS, especially after it halted new ERC claim processing in September 2023, citing rampant fraud.
Then in June 2024, the agency doubled down on its moratorium—only to reverse course months later, saying it had developed tools to sift out legitimate claims from bogus ones.
