Special initiative aimed at helping businesses concerned about an ineligible Employee Retention Credit claim amid aggressive marketing, scams.

IR-2023-193

WASHINGTON – As part of a larger effort to protect small businesses and organizations from scams, the Internal Revenue Service today announced the details of a special withdrawal process to help those who filed an Employee Retention Credit (ERC) claim and are concerned about its accuracy.

This new withdrawal option allows certain employers that filed an Employee Retention Credit claim but have not yet received a refund to withdraw the claim. Employers that submitted an ERC claim can withdraw their claim and avoid the possibility of getting a refund for which they’re ineligible.

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.

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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 ERC claim was:
  1. Filed individually or,
  2. Batched with others.
• Taxpayers who filed their ERC claims themselves and 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 a 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 can mail their request, but this will take longer for the IRS to receive.

Employers who have been notified they are under audit:

• 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.

Upcoming webinar and other resources for help

Tax professionals and others can register for a Nov. 2 IRS webinar, Employee Retention Credit: Latest information on the moratorium and options for withdrawing or correcting previously filed claims. Those who can’t attend can view a recording later.

Conclusion

This tax credit program that was poorly designed by Congress at the outset. Creating an escape route for taxpayers who fell victim to ERC scammers is a prudent response by the IRS. The ability to withdraw an ERC claim should eliminate thousands of unnecessary audits and criminal prosecutions for a

Do you need assistance in filing an ERC withdrawal? Request a free consultation HERE with Mark W. Sullivan, EA

About Per Diem Plus

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About the author

Mark W. Sullivan, EA founded Sullivan Consulting in 1998 in St. Louis, MO. He relocated to Scottsdale, AZ in 2020 and specializes in federal tax controversy representation, appeals and consulting on behalf of individuals, businesses, law, and accounting firms nationwide. In addition, he has served as the consulting and expert witness in numerous civil and criminal cases in multiple federal district courts.

Mark has an unlimited Enrolled Agents license and is admitted to practice before the Internal Revenue Service based on his extensive experience as a Revenue Officer in New York, NY, St. Louis, MO and Washington, D.C.

Disclaimer: This article is for information purposes only and cannot be cited as precedent or relied upon in a tax dispute before the IRS.

Copyright 2023 Mark Sullivan Consulting, PLLC; Per Diem Plus, LLC. Per Diem Plus proprietary software is the trademark of Per Diem Plus, LLC.®

Additional references:

IRS Newswire Issue Number: IR-2023-193