IRS Offers Amnesty Through ERC Claim Withdrawal

IRS Offers Amnesty Through ERC Claim Withdrawal

IRS Offers Lifeline for Companies Affected by Ineligible Claims and Marketing Scams

The Internal Revenue Service (IRS) announces a streamlined program for ERC Claim Withdrawals, allowing businesses to request withdrawal of ERC claims submitted but not fully processed. This new program aims to help companies affected by ineligible claims and marketing scams.

The Employee Retention Credit (ERC), initially part of the CARES Act in 2020, was extended through 2021 under the Consolidated Appropriations Act. This tax credit aimed to provide financial relief to qualifying employers facing significant delays, business interruptions, or substantial revenue decreases due to the COVID-19 pandemic.

Unfortunately, some businesses have faced challenges when claiming the ERC. Ineligible claims and marketing scams have caused confusion and delays, making it difficult for legitimate businesses to receive the needed assistance.

Streamlined Withdrawal Process: Aiding Employers to Safeguard Against Future Liabilities

The IRS’s newly implemented withdrawal facility allows employers to retract an ERC claim before receiving a refund. This helps businesses avoid repayments, accrued interest, and penalties that could impact their financial viability. Employers whose claims are under review can also prevent potential risks by withdrawing their applications. This process offers businesses greater flexibility and control during economic challenges.

Eligibility Criteria for Withdrawing an ERC Claim

Employers can utilize the ERC claim withdrawal mechanism if they meet these conditions:

• The claim was submitted using an adjusted return (Forms CT-1X, 944-X, 943-X, or 941-X).
• The adjusted return was filed exclusively for the ERC claim with no other changes.
• The employer intends to retract the full amount of their ERC claim.
• The IRS has not processed the refund, or the refund check has not been cashed or deposited.

Employers who don’t meet these criteria can submit a revised return to reduce or nullify their ERC claim.

Options for ERC Claim Withdrawals

Taxpayers wishing to withdraw an ERC claim must follow a strict procedure. Options include:

Contacting Your Payroll Firm

If a payroll firm filed your ERC claim, contact them to initiate the withdrawal process. The firm may need to submit the request on your behalf.

Sending ERC Withdrawal Requests via Fax

Independently filed claims can be withdrawn by faxing the request before receiving or cashing the refund check. The IRS provides a dedicated fax line for such requests to halt the refund process.

Withdrawing During an IRS Audit

For audit cases, submit the withdrawal request to the assigned auditor or the address listed on the IRS notice. Follow IRS guidance and refer to the FAQs for ERC Claim Withdrawals. Seeking help from a tax professional experienced in audits and resolutions is advised.

If you have an undeposited refund check, you can still retract your claim, offering additional flexibility to taxpayers.

Need Help? Talk to a Tax Audit and Compliance Lawyer at Anidjar Law

If you are facing an IRS audit or have questions about the ERC claim withdrawal process, seek help from a professional tax audit and compliance lawyer. Anidjar Law offers expert guidance to navigate the withdrawal process. Contact us today for a consultation and assistance with your tax-related issues.