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Recently the IRS announced a plan for employers to rescind inaccurate claims for the Employee Retention Tax Credit (ERTC) if they have fallen prey to a scam or no longer believe their claims are valid. Third-party “ERC mills” have aggressively marketed the tax credit to businesses, with many businesses victimized by misrepresentations about credit eligibility from these promoters.

This latest news follows the IRS announcement in September that it temporarily halted the processing of new ERTC claims, given the large volume of suspicious claims. The new withdrawal option provides a process for employers to effectively cancel a previous claim for refund, provided it has not yet been paid or the refund check has not been cashed. Employers can take advantage of this new procedure even if they have been notified that their claim is under audit.

In doing so, employers can avoid penalties and repayment with interest. The previous claim will then be considered null and void. Conversely, employers who knowingly filed fraudulent claims will not be shielded from potential criminal investigation and prosecution.

Employers can withdraw invalid ERC claims by following the IRS special instructions. The IRS recommends that employers work with trusted tax professionals who thoroughly understand ERC eligibility rules and learn the warning signs of ERC scams.

For more information, connect with one of our professionals today.

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