IRS Commissioner Daniel Werfel testifies during the Senate Finance Committee hearing on The President’s Fiscal Year 2024 IRS Budget and the IRS’s 2023 Filing Season, in the Dirksen Building on April 19, 2023.
Tom Williams | CQ-Roll Call, Inc. | Getty Images
The IRS on Thursday announced a “special withdrawal process” for small businesses that may have wrongly claimed the so-called employee retention tax credit, or ERC.
Enacted to support small businesses during the Covid-19 pandemic, the ERC, worth thousands per eligible employee, has been a magnet for fraudulent or “questionable claims,” according to the IRS. Many small businesses were misled by ERC promoters, prompting the agency to temporarily stop processing new claims in September.
The new withdrawal option allows certain small businesses to withdraw an ERC claim if they haven’t already received a refund, to avoid future repayment, interest and penalties, according to the IRS.
“The aggressive marketing of these schemes has harmed well-meaning businesses and organizations, and some are having second thoughts about their claims,” IRS Commissioner Danny Werfel said in a statement. “We want to give these taxpayers a way out.”
More from Personal Finance:
Net worth surged 37% in pandemic era for the typical family, Fed finds
Here’s who qualifies for the IRS’ free ‘Direct File’ pilot program in 2024
How Medicare open enrollment may help you cut health-care costs for next year
“We continue to urge taxpayers to consult with a trusted tax professional rather than a marketing company about this complex tax credit,” Werfel said.
Small businesses can use the ERC claim withdrawal process if they meet the following criteria:
- They claimed the ERC on an adjusted employment return (Forms 941-X, 943-X, 944-X, CT-1X).
- They only filed the adjusted return to claim the ERC and made no other changes.
- They intend to withdraw the entire ERC claim.
- They have either not received payment for their claim, or received the payment but haven’t cashed or deposited the refund check.
Small businesses can learn more about the ERC withdrawal process by visiting IRS.gov/withdrawmyERC.
Don’t miss these CNBC PRO stories:
Credit: Source link
