Employee Retention Credit - Amnesty Program

By Scott Hennessy On January 31, 2024
Scott is a CPA & Manager at BSB.

ERC Withdrawal Program

The IRS has announced a withdrawal process to help businesses who were misled by ERC promoters into filing ineligible claims.

  • Claims that are withdrawn will be treated as if they were never filed.
  • By withdrawing claims, the IRS will not issue penalties or interest.
  • The IRS continues to warn taxpayers to use caution before applying for the ERC as marketers and scammers continue to target businesses.
  • The IRS has issued guidance to help employers that were misled into claiming the ERC and have already received the payment.

The IRS urges employers who want to file an ERC claim before the 1/31 deadline to use a trusted tax professional that understand the complexity of the ERC rules instead of promoters/marketers that take advantage of honest business owners.

Withdrawal Eligibility

Who can ask to withdraw an ERC claim?

  • Employers who made the claim on an adjusted employment return (Forms 941-X, 943-X, 944-X, CT-1X)
  • Employers who filed the adjusted return only to claim the ERC
  • Employers that want to withdraw the entire amount of their ERC claim
  • Employers with claims that have not been paid by the IRS
  • Employers with claims that have been paid by the IRS, but has not cashed or deposited the refund check

How to withdraw an ERC claim?

  • Taxpayers who used a professional payroll company to file their ERC claim should consult with the payroll company, in some cases they may need to submit the withdrawal.
  • Taxpayers should fax or mail their withdrawal request if they filed their ERC claims themselves, haven't received, cashed or deposited a refund check and have not been notified their claim is under audit.
  • Audited employers can send the withdrawal request to the examiner or respond to the audit notice if no examiner has been assigned.

Businesses that incorrectly filed and received an ERC refund can return 80% of the received amounts with no interest, penalties or audit risk, and keep the remaining 20%.

The withdrawal process allows employers who have used an unqualified provider to come forward and return amounts received with limited cost to the organization.

Next steps: The IRS has provided specific next steps to take dependent upon your specific fact pattern, but the window for application closes on March 22, 2024.

The new disclosure program is part of a larger effort at the IRS to stop aggressive marketing around ERC that misled some employers into filing claims.

If you're a business owner in the New York Metro Area and need help making the best decisions for your business, request a consultation with our experienced accountants today. We look forward to providing you service.

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