Update Applicable to:
All employers who claim ERTC
The IRS has announced an immediate moratorium on processing new Employee Retention Tax Credit (ERTC or ERC) claims, which will last at least until the end of 2023. Additionally, the IRS issued a warning against “aggressive promoters,” known as ERTC mills, who mislead employers into making improper ERTC claims.
What are the details?
The IRS has temporarily halted the processing of new ERTC claims to address potential issues and improper claims. This suspension will remain in effect until at least the end of 2023. The IRS has reiterated its warning about aggressive promoters or ERTC mills that provide misleading information to employers, leading to improper ERTC claims.
Pat Cleary, President and CEO of the National Association of Professional Employer Organizations (NAPEO) expressed support for the IRS’s actions and its efforts to address the backlog of legitimate ERTC claims. Many small businesses have been waiting for months or even years to receive their rightful ERTC funds.
The IRS’s announcement provides clarity on the processing time for outstanding ERTC filings and acknowledges the delays in handling these claims.
- The withdrawal process is available to taxpayers who filed an ERTC claim on an amended return (e.g., Form 941-X) and who have not yet received a refund (or have not cashed or deposited a refund check).
- The withdrawal process is only available in cases where a taxpayer filed an amended return to claim the ERTC, made no other adjustments on the amended return, and wants to withdraw the entire amount of their ERTC claim. Taxpayers who are not eligible to use the withdrawal process can reduce or eliminate their ERTC claim by filing an amended return.
- Taxpayers Who Already Received an ERTC Refund: The IRS will provide additional guidance this fall to help employers that were misled into claiming the ERC and have already received the payment.
Q: How do I withdraw my ERC claim if I used a certified professional organization (CPEO), professional employer organization (PEO), and other IRC section 3504 agents? (added October 19, 2023)
A: If you use a professional payroll company and they filed your ERC claim for you, you should consult with them if you want to withdraw your ERC claim. Depending on how the company filed your claim – individually or batched with others – you may need to have them submit your withdrawal request.
The IRS also released a webpage describing the process in more detail, FAQs on the withdrawal process, and a fact sheet for your review. The IRS plans to hold a November 2 webinar on the ERTC claims moratorium and withdrawal process.
For more information, please see the links below:
*Latest IRS Update: IR-2023-193, Oct. 19, 2023
What do employers need to do?
The IRS urges taxpayers to carefully review the ERTC guidelines during the moratorium period. Employers should consult a trusted tax professional for questions during this period and review the above links.
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