New ERC Withdrawal Program
On Thursday, October 19th, the IRS unveiled a fresh initiative that permits employers to retract their claims for the Employee Retention Credit (ERC). This move comes on the heels of the IRS's recent halt in processing new ERC claims just last month. This withdrawal program provides employers who have previously submitted ERC claims they now consider to be incorrect an opportunity to avoid potential fines and interest associated with such erroneous claims. The IRS also restated its earlier strong cautions regarding the use of ERC "mills" that promote business eligibility for the credit in a manner inconsistent with IRS guidance.
Who can ask to withdraw an ERC Claim?
Employers can use the ERC claim withdrawal process if all of 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 they 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.
Taxpayers 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, taxpayers 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 using computer or mobile device. The IRS has set up a special fax line to receive withdrawal requests. This enables the agency to stop processing before the refund is approved. Taxpayers who are unable to fax their withdrawal using a computer or mobile device 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.
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