Businesses Urged to Confirm Eligibility for Employee Retention Credit

The IRS is urging businesses with pending or previously-approved Employee Retention Credit (ERC) claims to review their filings carefully. Incorrect claims could lead to audits, repayments, penalties, and interest.

Background

The ERC was introduced to support businesses impacted by the COVID-19 pandemic. Although the credit ended in 2021, many businesses have filed amended returns to claim it. Unfortunately, some have fallen prey to aggressive promoters, leading the IRS to review nearly all applications.

What you need to know

If you discover that you filed an inaccurate claim, the IRS allows businesses to withdraw ERC applications under these conditions:

• The ERC claim was made using an adjusted employment return (Forms 941-X, 943-X, 944-X, or CT-1X).
• The adjusted return was filed solely to claim the ERC.
• You wish to withdraw the entire amount of your claim.
• The IRS has not yet paid your claim, or you haven’t cashed or deposited the refund check.

If you don’t meet these conditions, you can file an amended return to reduce or eliminate the claim. If your claim was filed through a payroll company, they may need to handle the withdrawal. Businesses already under audit should send their withdrawal request to the IRS examiner.

If you’ve filed an ERC claim, now is the time to review it, withdraw if necessary, or prepare to defend your claim.