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Updates on ERC Moratorium and New Withdrawal Process

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There has been much uncertainty in the world of ERC since the IRS issued their moratorium on processing new ERC claim submissions on September 14th, 2023.

In the days/weeks after, there was a significant decrease in advertising by ERC providers, as aggressive promoters were one of the major targets of the IRS moratorium. The IRS continues to urge all taxpayers to consulted with a trusted tax advisor when determining if they qualify and should file for the credit.

On November 2nd, 2023, the IRS hosted a webinar to cover the latest information of the moratorium and to provide additional information on the new ERC claim withdrawal program. The IRS confirmed that the moratorium is still set to continue through the end of the year but did not provide any insights as to if this would be extended further. The IRS stated that approximately 15% of all ERC claims received came in the 90 days prior to the moratorium – a massive number considering the program has been around for over 3 years and the number of claims should be slowing down. The IRS suspects that the vast majority of these come via aggressive promoters.

If you are a taxpayer that has filed for ERC, the IRS has setup a withdrawal program that can be viewed in more detail at IRS.gov/withdrawmyERC. Below is a quick overview of the program:

Who can withdraw:

  • You are trying to withdraw ERC for a full or complete quarter(s)
    • Partial withdrawals or corrections need to be made on a new Form 941-X
  • You have either not received a check or have not deposited the check
  • You have not received a notice from the IRS that your claim was disallowed

How to withdraw:

  • Take the originally filed form that was used to claim the credit and write “Withdrawn” on the left margin of the first page
  • In the right margin of the first page, have an authorized person at the Company sign, date, print name and title (refer to IRS instructions on site for who is authorized)
  • Submit copy to the IRS’s ERC claim withdrawal fax line at 855-738-7609.

Note that the claim is not considered withdrawn until you receive an acknowledgement letter from the IRS. If you previously amended an income tax return to report the ERC claim amount as taxable income, you will have to amend your income tax return again to reflect the withdrawal of the claim. At this time there is no withdrawal process for those that have cashed the checks. This is still in the works and details will be released in the coming weeks.

One of the most important takeaways from the IRS webinar was that the IRS representatives reiterated that if you have a valid claim you should continue to file for the ERC and expect the claim to be processed once the moratorium ends. The moratorium’s main purpose is to protect taxpayers from aggressive promoters that are misleading taxpayers into filing improper claims. 

For more information about the ERC, reach out to us today.

Jesse is a Manager in Meaden & Moore’s Assurance Services Group with over six years of experience in public accounting. He coordinates and oversees daily fieldwork, prepares financial statements and executes various other aspects of the assurance engagement. Jesse works with a wide variety of clients in various industries including service, manufacturing, retail and construction.

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