Nov 29, 2023

You Can Now Potentially Withdraw Your ERC Claim

Written by Sarah Shirley

Earlier this fall, the IRS issued a moratorium on the processing of any new Employee Retention Credit (ERC) claims through at least the end of the year, citing concerns that a growing number of new claims are potentially ineligible and stem from businesses being pressured by aggressive promoters and marketing. In an effort to protect targeted businesses and potentially reduce the processing time for legitimate claims, the IRS announced a new program last month that allows companies to withdraw any current ERC claim if they are concerned about its accuracy without being charged any penalties or interest.

IRS Commissioner Danny Werfel says that the IRS is “committed to helping small businesses and others caught up in this onslaught of Employee Retention Credit marketing” by giving filers a way to rescind any claims that might not be eligible. “We want to give these taxpayers a way out. The withdrawal option allows employers with pending claims to avoid future problems, and we encourage them to closely review the withdrawal option and the requirements.”

For those wishing to withdraw an ERC claim, the following must apply:

  • The claim was made on an adjusted employment return (Forms 941-X, 943-X, 944-X, CT-1X).
  • The adjusted return was filed only to claim the ERC, and there were no other adjustments.
  • The withdrawal would be for the entire amount of the ERC claim.
  • The IRS has not paid the claim; or the IRS has paid the claim, but the refund check has not been cashed or deposited.

Those not eligible to withdraw their claim based on the requirements above can reduce or eliminate their ERC claim by filing an amended tax return.

Eligible taxpayers interested in withdrawing their ERC claim can learn more via the IRS website here.

If your ERC claim was filed through a professional payroll company, the IRS recommends consulting with the payroll company if you’re interested in withdrawing.

Should you have any questions or concerns that you would like to discuss regarding your business’ ERC claim, please do not hesitate to contact us or call our office at (833) CPA-BMSS.