In an effort to safeguard small businesses and organizations from unscrupulous scammers, the IRS has introduced a withdrawal process for those who have filed an Employee Retention Credit (ERC) claim and have concerns about its accuracy.
This new option offers employers who have previously submitted an ERC claim but haven’t received a refund the opportunity to withdraw their claim. This will prevent the disbursement of potentially ineligible refunds and help filers avoid tax penalties and repercussions.
The introduction of the withdrawal process follows the announcement of a moratorium on processing new ERC claims. This moratorium, in effect until at least the end of the year, was enacted due to the alarming spike in false claims.
While payments for claims submitted before September 14 will continue during the moratorium, the process will be slower due to more comprehensive compliance reviews to ensure legitimacy.
Who can ask to withdraw an ERC claim?
Employers can make use of the ERC claim withdrawal process if they meet all the following criteria:
- They made the claim on an adjusted employment return (Forms 941-X, 943-X, 944-X, CT-1X).
- They filed the adjusted return only to claim the ERC and made no other adjustments.
- They want to withdraw the entire amount of their ERC claim.
- The IRS has not paid their claim, or the IRS has paid the claim, but they haven’t cashed or deposited the refund check.
Those not meeting these criteria can reduce or eliminate their ERC claim by filing an amended return.
How do I withdraw my claim?
Here’s a summary of the steps business owners should follow to start the withdrawal process:
- Taxpayers whose professional payroll company filed their ERC claim should consult with the payroll company. Depending on whether the taxpayer’s ERC claim was filed individually or batched with others, the payroll company may need to submit the withdrawal request.
- Taxpayers who filed their ERC claims themselves, haven’t received, cashed, or deposited a refund check, and have not been notified their claim is under audit should fax withdrawal requests to the IRS. The IRS has set up a special fax line to receive withdrawal requests.
- Employers who have been notified they are under audit can send the withdrawal request to the assigned examiner or respond to the audit notice if no examiner has been assigned.
- Those who received a refund check but haven’t cashed or deposited it can still withdraw their claim by mailing the voided check with their withdrawal request.
The new withdrawal option provides businesses with a crucial lifeline to rectify claims that are potentially false. If you have concerns about your ERC claim or need assistance with the withdrawal process, Boris Benic and Associates can help. Our experienced team is here to provide you with the guidance and support you need.