What is the ERC?
The ERC is a tax credit that was created to help businesses during the COVID-19 pandemic. It allows businesses to claim a credit for certain wages paid to employees who were unable to work due to the pandemic.
Why is the IRS offering a withdrawal option?
The IRS is offering a withdrawal option because many small businesses were misled by ERC promoters and filed claims that they were not eligible for. The IRS wants to give these businesses a chance to withdraw their claims without penalty.
Who is eligible to withdraw an ERC claim?
Small businesses can withdraw an ERC claim if they meet the following criteria:
- They claimed the ERC on an adjusted employment return, or forms:
- 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.
How do I withdraw an ERC claim?
To withdraw an ERC claim, you must file a signed and dated copy of the first page of your adjusted employment return to the IRS. You can fax the form to 855-738-7609 or mail it to the following address:
- Internal Revenue Service
- Cincinnati, OH 45999
Important note: You must withdraw your entire ERC claim. You cannot withdraw a portion of your claim.
So why should I care?
The IRS’s new withdrawal process for the employee retention tax credit (ERC) is important for several reasons, but namely: It protects small businesses from penalties and interest.
Small businesses that filed ineligible ERC claims could face significant penalties and interest if they do not withdraw their claims. The withdrawal process allows these businesses to avoid these penalties and interest.
Secondarily, it sends a message. The IRS is aware there are many ERC promoters misleading businesses into filing ineligible claims. The withdrawal process is a way for the IRS to show that it is serious about cracking down on this fraud.
It also keeps things fair and equitable. And the withdrawal process helps to protect the integrity of the system by ensuring that only eligible businesses are claiming the credit.