IRS Offers Withdrawal Option for Employee Retention Credit (ERC) Claims: Safeguarding Small Businesses from Scams
The Tax Moves Blog
Withdrawal Option Details:
Who Can Apply for ERC Claim Withdrawal?
- The claim was filed on an adjusted payroll tax return (Forms 941-X, 943-X, 944-X, CT-1X).
- The submission was ONLY made to claim the Employee Retention Credit (ERC) without any other adjustments.
- The intention is to withdraw the total amount of the ERC claim.
- It’s noteworthy that the IRS has not disbursed the claim, or if payment has been made, the refund check has neither been cashed or deposited.
- It is crucial to bear in mind that if the ERC claim was intentionally filed fraudulently, or if there was assistance or conspiracy in such behavior, withdrawing a fraudulent claim will not exempt the party involved from potential criminal investigation and prosecution.
How to Withdraw an ERC Claim:
1.You have not received a refund, and no audit notification has been issued:
If you haven’t received a refund yet and have not been notified of an audit, you are in the early stages of the process. You can proceed with withdrawing your ERC claim as a result without further complications.
2.You have not received a refund and have been notified of an audit:
If you haven’t received a refund and have been notified of an audit, it is advisable to follow the instructions provided in the audit notification. Depending on the specific details of your situation, you may need to coordinate with the assigned examiner or respond according to the received instructions.
3.You received a refund check but did not cash or deposit it:
If you have received a refund check but have not cashed or deposited it, you still have the option to withdraw your ERC claim. You will need to submit your withdrawal request following the instructions provided on IRS.gov/withdrawmyerc.
If you use the services of a professional payroll company to file your ERC claim, it is recommended to contact them to coordinate the withdrawal. Depending on how the company submitted your claim (individually or collectively with others), they may need to manage and submit your withdrawal request on your behalf.
Please note that these processes are designed to ensure efficient and accurate management of ERC claims, and it is encouraged to follow the detailed instructions provided by the IRS to avoid any additional inconvenience.
Who can´t use the withdrawal Process?
- You are attempting to withdraw only a portion of your Employee Retention Credit (ERC).
- Your adjusted return (Form 941-X, Form 943-X, Form 944-X, Form CT-1X) reports tax items not included in your original return, in addition to the ERC claim.
- You need to make other corrections to your return.
- You have already received your ERC refund and have cashed or deposited the refund check.
- You have received a notice or letter from the IRS disallowing the entire amount of your ERC.
- In the event that you are unable to withdraw your claim, you still have the option to file another adjusted return if you need to:
- Reduce the amount of your ERC claim.
- Make other adjustments to your amended return.
What Happens Next?
If your withdrawal request is accepted, you may need to make adjustments to your tax return. For a detailed explanation of how the Employee Retention Credit (ERC) affects your tax return, please refer to the “Claiming the ERC” section. If you need assistance or have further questions, we recommend seeking guidance from a trusted tax professional.
This process ensures transparent and accurate handling of ERC withdrawal requests, and collaborating with a tax professional can provide the necessary support to address any required adjustments to your tax return.
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