Special Edition: e-News for Small Business Issue 2024-05

Act now to resolve incorrect ERC claims before March 22

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e-News for Small Business March 15, 2024

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Issue Number: 2024-05

Check Employee Retention Credits and resolve incorrect claims before March 22

Every business that filed for the Employee Retention Credit (ERC) should act now to make sure they didn’t incorrectly claim the credit.

The IRS has two limited-time options to help businesses voluntarily resolve incorrect claims:

  • Employers who received an incorrect ERC by December 21, 2023, either as a refund or as a credit on a tax return, can apply to the ERC Voluntary Disclosure Program through March 22, 2024. This option lets a taxpayer repay the incorrect ERC, minus 20 percent, for any tax period they weren’t eligible for ERC. Generally, businesses who enter this program don’t have to amend other returns affected by the incorrect ERC and don’t have to repay interest they received from the IRS on an ERC refund.
  • Businesses should quickly pursue the claim withdrawal process if they need to ask the IRS not to process an ERC claim for any tax period that hasn’t been paid yet. Taxpayers who received an ERC check, but haven’t cashed or deposited it, can also use this process to withdraw the claim and return the check. The IRS will treat the claim as though the taxpayer never filed it. No interest or penalties will apply.

Some promoters misled businesses into improperly filing for the credit when the business didn’t qualify to claim it. Some promoter groups called the credit by another name, such as a grant, business stimulus payment, government relief or other names. Even if terms such as Employee Retention Credit or Employee Retention Tax Credit don’t sound familiar, businesses should still review their records to make sure they didn’t incorrectly claim this pandemic-era credit.

ERC resources
The following resources can help businesses determine ERC eligibility and resolve incorrect claims:

Additional information

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