The most recent IRS update includes guidance for employers to help them determine whether they are eligible to withdraw an ERC claim, and if so, how to withdraw the claim (LINK). This procedure could prove beneficial to some employers who wish they had not submitted an ERC claim—potentially helping to avoid staggering civil penalties. There are, however, some very real risks in withdrawing an ERC claim—namely the implications of an admission that the earlier ERC claim was improper. Employers should absolutely consult with a reputable tax advisor before taking advantage of the ERC withdrawal procedures.
Should employers wish to proceed with an ERC withdrawal, the IRS describes who is eligible:
- 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 you made no other adjustments.
- You want to withdraw the entire amount of your ERC claim.The IRS has not paid your claim, or the IRS has paid your claim, but you haven’t cashed or deposited the refund check.
- You haven’t received a refund and haven’t been notified your claim is under audit.
- You haven’t received a refund and you’ve been notified your claim is under audit.
- You received a refund check but haven’t cashed or deposited it.
If you have any questions about this article or any other federal tax matter, please contact me at 214-749-2417 or firstname.lastname@example.org.