Understanding the Recent Changes to the Employee Retention Credit (ERC)
The Employee Retention Credit (ERC) has been a significant topic of discussion in the financial community in recent months. The Internal Revenue Service (IRS) recently spotlighted a concerning trend of aggressive promotion and scams connected with the credit. Unfortunately, many well-intentioned businesses have fallen victim to such “ERC mills,” resulting in a web of inaccuracies and potential penalties.
What has the IRS Done?
The IRS is offering a lifeline to businesses. They’re granting employers an avenue to rescind any inaccurate claims for the ERC, especially if they’ve been ensnared by the misleading promises of these “ERC mills.”
Notably, the IRS paused the processing of new ERC claims last month. This decision was a reaction to an unexpected surge in claims, which resulted from the relentless promotion of the ERC as an easy avenue to access federal funds. However, recognizing the challenges this could bring to innocent businesses tricked by scams, the IRS also introduced a process for withdrawing illegitimate claims. This can help employers avoid accruing unwanted interest and penalties.
How Does the Withdrawal Process Work?
For the employers who, in good faith, applied for the ERC but haven’t yet seen a refund, there’s now an option to withdraw their submission. This allows them to sidestep future complications, such as repayments, interest, and penalties. If a claim is withdrawn, it’s as though it never existed, ensuring the IRS imposes no penalties or interest.
However, it’s essential to note that any fraudulent claims, or involvement in such schemes, won’t be protected from potential criminal investigation and prosecution.
A Checklist for Withdrawal Eligibility:
* The claim was made on an adjusted employment return.
* The adjusted return was filed solely to claim the ERC, with no other adjustments made.
* The entirety of the ERC claim is intended for withdrawal.
* The IRS hasn’t paid the claim or, if they have, the refund check hasn’t been cashed or deposited by the business.
Upcoming Course Announcement: Dive Deeper into the ERC Changes
For those seeking a more comprehensive understanding of these recent developments, we’re excited to announce an upcoming course:
Employee Retention Credit (ERC) 2023 Update
Date: November 29, 2023
Time: 2 – 3:30 PM
The course will feature attorney speakers from Frost Law, who’ll delve deep into the nuances of the recent ERC changes, providing professional insights and guidance.
This course aims to equip businesses and tax professionals with the knowledge they need to navigate these turbulent waters, ensuring they can make informed decisions related to the ERC.
Be vigilant, stay informed, and always prioritize the best interests of your business.
