Congress created the Employee Retention Credit (ERC) in 2020 to help businesses that were either closed by government order or lost substantial revenue during the Covid pandemic. Unfortunately, the program became a target for tax scammers, who aggressively push business owners who do not qualify for the ERC into filing bogus credit claims.
To protect businesses from the scams, the IRS has halted processing of new ERC claims through at least December 31. However, scammers have responded by changing their tactics, now pushing business owners into costly loans in anticipation of ERC refunds that will never come.
During the processing moratorium, taxpayers who may have been tricked into claiming the ERC without meeting the eligibility rules may be able to withdraw their claims without risk of penalty. These business owners may withdraw their applications if their ERC claim has not yet been processed, or if they received an ERC refund but have not yet cashed or deposited the check.
Instructions for the withdrawal process may be found on the IRS Withdraw My ERC webpage (link below). Special instructions apply for businesses that have been notified of an IRS audit of their ERC applications.
Our trusted business tax professionals at RTW Xxact Enterprises can help you determine whether your business qualifies for the ERC, and either file a legitimate claim or withdraw a questionable application.