The IRS announced new ERC withdrawal procedures today for taxpayers who filed Employee Retention Credit (ERC) claims and are concerned about whether they actually qualify. (IR-2023-93) The withdrawal procedures are in response to IRS concerns about the onslaught of overly aggressive marketers and promoters who mislead businesses into believing they are eligible for refund claims when they are not.
The volume of questionable ERC claims led the IRS to announce a moratorium through the end of 2023 on processing any new ERC claims. (See our September 14, 2023, flash e-mail, “Effective immediately, the IRS is putting a hold on processing new ERC claims,” available at: www.caltax.com/news/flash-email/2023-39-effective-immediately-the-irs-is-putting-a-hold-on-processing-new-erc-claims/)
Taxpayers are eligible to withdraw their ERC claims if all of the following apply:
- They made the claim on an adjusted employment return (Forms 941-X, 943-X, 944-X, or CT-1X);
- They filed the adjusted return only to claim the ERC, and they made no other adjustments;
- They want to withdraw their entire ERC claim; and
- The IRS has not paid their claim (or if the IRS has paid their claim, the taxpayer hasn’t cashed or deposited the refund check).
Taxpayers who have received their refund but haven’t cashed or deposited their refund check can still withdraw their claim by mailing the voided check back to the IRS with their withdrawal request.
Taxpayers whose ERC claims are currently being audited can send their withdrawal request to the assigned examiner or respond to the audit notice if no examiner has been assigned.
Taxpayers who are not eligible to use the withdrawal procedures because they don’t meet the requirements listed above can still reduce or eliminate penalties by filing amended employment returns.
Detailed procedural instructions for requesting an ERC withdrawal can be found on the IRS’s special webpage set up for this purpose at:
Withdrawing a fraudulently filed claim will not stop criminal prosecution of the taxpayer or preparer if the credit was fraudulently claimed.