Withdrawal Process for Employee Retention Credit Claims
As part of an effort to protect small businesses and organizations from Employee Retention Credit (ERC) scams, the IRS announced the details of a special withdrawal process to help those who filed an ERC claim and are concerned about its accuracy.
This option was created to help small business owners and others pressured or misled by ERC marketers or promoters into filing ineligible claims. Claims that are withdrawn will be treated as if they were never filed. The IRS will not impose penalties or interest.
This withdrawal option allows certain employers who filed an ERC claim but have not received a refund to withdraw their submission and avoid future repayment, interest, and penalties. Employers that have submited an ERC claim that’s still being processed can withdraw their claim and avoid the possibility of getting a refund for which they’re ineligible.
Who can ask to withdraw an ERC claim?
Employers can use the ERC claim withdrawal process if all the following apply:
They made the claim on an adjusted employment return (Forms 941-X, 943-X, 944-X, CT-1X).
They filed the adjusted return only to claim the ERC and made no other adjustments.
They want to withdraw the entire amount of their ERC claim.
The IRS has not paid their claim, or the IRS has paid the claim, but they haven’t cashed or deposited the refund check.
Those who are not eligible to use the withdrawal process can reduce or eliminate their ERC claim by filing an amended return. For details, see the Correcting an ERC claim – Amending a return section of the frequently asked questions about the ERC.
How to withdraw an ERC claim.
To take advantage of the claim withdrawal procedure, you should carefully follow the special instructions at IRS.gov/withdrawmyERC, summarized below.
Taxpayers whose professional payroll company filed their ERC claim should consult with the payroll company. The payroll company may need to submit the withdrawal request for the taxpayer, depending on whether the taxpayer’s ERC claim was filed individually or batched with others.
Taxpayers who filed their ERC claims themselves, haven’t received, cashed, or deposited a refund check, and have not been notified their claim is under audit should fax withdrawal requests to the IRS. The IRS has set up a fax line (855-738-7609) to receive withdrawal requests. This enables the agency to stop processing before the refund is approved. Taxpayers who cannot fax their withdrawal can mail their request, but this will take longer for the IRS to receive.
Employers who have been notified they are under audit can send the withdrawal request to the assigned examiner or respond to the audit notice if no examiner has been assigned.
Those who received a refund check, but haven’t cashed or deposited it, can still withdraw their claim. They should mail the voided check with their withdrawal request using the instructions at IRS.gov/withdrawmyERC.
Give me a call.
If you have questions, please reach out to me. I understand the complex ERC rules and am not a promoter or marketer trying to get a hefty contingency fee while taking advantage of honest taxpayers.