Executive summary
The IRS recently announced a limited-application withdrawal process for employee retention credit (ERC) claims, allowing certain employers that filed a claim but have not yet received a refund to withdraw their submission and avoid future repayment, interest and penalties. Employers that submitted an ERC claim that's still being processed can withdraw it and avoid the possibility of getting a refund for which they're ineligible. Additionally, employers that have received a refund check but have yet to cash or deposit it may also utilize the withdrawal process.
Key takeaways
- The IRS is permitting taxpayers who have an outstanding ERC claim, as well as those who have received but yet to cash or deposit refund checks, to withdraw their ERC claim via one of three simple processes and be treated as if their claims “were never filed.”
- The withdrawal process allows taxpayers to avoid interest, penalties and litigation fees. However, those who filed or participated in the filing of a fraudulent claim may still face potential criminal investigation and prosecution even if the claim is withdrawn.
- There are three withdrawal methods, with the appropriate method depending on the taxpayer’s specific facts, such as whether they have already received a check or are currently under IRS audit.
- The IRS stated they are working on guidance to help employers that were misled into claiming the ERC and have already received the payment with more details anticipated later this year,
- Taxpayers eligible for this withdrawal program are strongly encouraged to consult a trusted tax professional to determine whether they should consider pursing a withdrawal.
- The announcement does not provide any updates on the timing for the IRS’ potential lifting of its moratorium on processing new ERC claims, that “will last until at least the end of this year,” nor does it expressly state when the withdrawal program will expire.
Related sections
Article Tags
