{"id":28050,"date":"2023-10-19T15:47:55","date_gmt":"2023-10-19T15:47:55","guid":{"rendered":"https:\/\/isafespend.com\/personal-finance\/taxes\/erc-irs-withdrawal-process-what-should-business-owners-do\/"},"modified":"2023-10-19T15:47:57","modified_gmt":"2023-10-19T15:47:57","slug":"erc-irs-withdrawal-process-what-should-business-owners-do","status":"publish","type":"post","link":"https:\/\/isafespend.com\/?p=28050","title":{"rendered":"ERC \u2014 IRS Withdrawal Process \u2014 What Should Business Owners Do?"},"content":{"rendered":"
\n

The IRS today announced a withdrawal process for business owners\/tax-exempt managers from their Employee Retention Credit (ERC) claims. The IRS has been taking a hard eye at ERC filings given the significant number of pop-up shop promoters that have been out there ringing the bell and engaged in aggressive marketing. In response to concerns about these fly-by-night organizations that tell business owners they can complete an ERC filing in minutes – the IRS issued on September 14, 2023 a moratorium on processing new ERC claims.<\/p>\n

As I\u2019ve written earlier, business owners need to be extremely eyes open about whether they qualify for the ERC or not. The IRS concerns about pop-up shop promoters is understandable. At alliantgroup we\u2019ve been asked by our CPA partners to review their clients ERC filings \u2013 ERC filings that were put together by these promoters. What we\u2019ve seen all too often from these promoters as to the ERC filings for their clients is blinking. Basic information \u2013 including particularly what specific Covid government order they are relying on for making the ERC claim \u2013 is missing (also \u2013 make sure it is an actual federal\/state\/local government Covid-related order that applies to your business \u2013 emphasis on \u201corder\u201d \u2013 not just a suggestion, policy or best practice \u2013 an order).<\/p>\n

The IRS with the withdrawal process announced today is essentially giving business owners a chance to exit from the ERC process \u2013 and not get caught up in the maw of IRS examination and audit.<\/p>\n

Next Steps For Business Owners <\/strong><\/p>\n

The bottom line is the ERC remains a balancing \u2013 while many businesses and tax exempts may qualify for the ERC \u2013 many businesses and tax exempts do not qualify. As the IRS itself states in today\u2019s withdrawal notice: \u201cThe ERC is a complex credit with precise requirements to help businesses during the pandemic . . .\u201d Emphasis on \u201ccomplex.\u201d If you were told that your ERC credit can be calculated in minutes \u2013 run, run now to have a tax professional knowledgeable in the ERC to have your ERC closely reviewed. With an independent review by a tax professional in hand a business owner can be in a better place to decide whether to withdraw or go forward (or alternatively what we also see after a review of an ERC claim \u2013 is to modify\/limit an ERC claim to be in compliance with the law).<\/p>\n

One quick indication that you may have gone down a bad path is if your business \/ tax exempt claimed 6 or 7 quarters for the ERC. alliantgroup has done a significant number of ERC claims and it is rare for us to have a client that qualifies for more than 1 \u2013 3 quarters (with many qualifying for ERC for just one or two quarters). However, when we are asked to review the work of promoters \u2013 seeing 6 or 7 quarters being claimed for ERC is common.<\/p>\n

<\/fbs-ad><\/p>\n

Further, if the claim is you qualify for ERC because of a more than nominal impact on your business from a Covid-related order \u2013 how is the \u201cmore than nominal\u201d documented and supported (and is it within the IRS safe harbor of a 10% impact on your business). Bottom line \u2013 how have you substantiated your \u201cmore than nominal\u201d impact claim for the ERC?<\/p>\n

In addition, if your ERC claim is based on supply chain and disruptions based on Covid order\u2013 be extremely careful. As I wrote in Forbes earlier this year, the IRS has put out useful guidance on making a claim based on supply chain disruptions \u2013 and highlights a lot of incorrect practices that promoters are using to improperly qualify unaware business owners for ERC.<\/p>\n

These are just a few quick examples of indications that your ERC claim needs to be closely reviewed. This is the time to get right with the IRS \u2013 and ensure that you are properly claiming what your business qualifies for under the ERC \u2013 or to withdraw now if the facts and law don\u2019t support your ERC claim. In the words of the Clash: Should I Stay Or Should I Go Now?<\/p>\n

Withdrawal<\/strong><\/p>\n

The IRS today provides instructions on withdrawing an ERC claim. In short, for those who filed the ERC themselves and haven\u2019t received, cashed or deposited a refund check \u2013 and have not been notified their claims is under audit can fax withdrawal requests to the IRS (IRS has a special fax line). For those who have already donated their fax machine to the museum \u2013 you can mail your request.<\/p>\n

To elect to withdraw an ERC application \u2013 the IRS states that all of the following must apply \u2013 you made the claim on an adjusted employment tax return (Forms 941-X, 943-X, 944-X, CT-1X); you filed your adjusted return only to claim the ERC and made no other adjustments; you want to withdraw the entire amount of your ERC claim; and, the IRS has not paid your claim (or they did pay but you haven\u2019t cashed the check). However, note \u2014 if you engaged in fraud, or conspired or assisted in the fraud withdrawal will not exempt you from potential criminal investigation and prosecution.<\/p>\n

Also \u2014 business owners 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.<\/p>\n

ERC \u2014 a great benefit for those who qualify. But for those who don\u2019t \u2013 a good time to think again.<\/p>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

The IRS today announced a withdrawal process for business owners\/tax-exempt managers from their Employee Retention Credit (ERC) claims. The IRS has been taking a hard eye at ERC filings given the significant number of pop-up shop promoters that have been out there ringing the bell and engaged in aggressive marketing. In response to concerns about<\/p>\n","protected":false},"author":1,"featured_media":28051,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[56],"tags":[],"class_list":{"0":"post-28050","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-taxes"},"yoast_head":"\nERC \u2014 IRS Withdrawal Process \u2014 What Should Business Owners Do? | iSafeSpend<\/title>\n<meta name=\"description\" content=\"The IRS today announced a withdrawal process for business owners\/tax-exempt managers from their Employee Retention Credit (ERC) claims. 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