On Thursday, October 19, 2023, the IRS released the process for certain taxpayers who wish to withdraw previously filed ERC claims. This comes on the heels of the IRS announcement last month that they were halting the processing of future claims until at least the end of 2023.
If you no longer believe you qualify for the ERC, this process offers a streamlined approach to withdraw previously filed claims. Additionally, withdrawn claims are treated as though they were never filed; therefore, the IRS will not impose penalties and/or interest. However, you could still be subject to potential criminal investigation if thought to have willfully filed fraudulent ERC claims.
The withdrawal process will not be applicable for all taxpayers. It will not apply to:
- Those who have already received and cashed or deposited the refund check, and
- Those who do not wish to withdraw the entire filed return.
The entire return may not be able to be withdrawn if it included changes other than the ERC claim, or if you used a Professional Employer Organization (PEO). If you used a PEO, the IRS suggests consulting with your provider to determine whether the claim was filed individually or batched with other customers of the PEO, as the PEO may need to submit the withdrawal request. If the entire return cannot be withdrawn, you will need to file a new amended return.
Who Is Eligible to Withdraw Their ERC Claims?
You must meet all of the following criteria to be eligible for the current withdrawal process:
- Claim was made on an amended employment tax return (Forms 941-X, 943-X, 944-X or CT-1X);
- The amended return was filed to claim the ERC with no other changes from the original return;
- The entire amount of the ERC claim is to be withdrawn; and
- The IRS has either not paid the claim, or the IRS has paid the claim but the refund check has not been cashed or deposited.
The withdrawal process is generally the same for all taxpayers; however, there are some slight differences on the submission process depending on whether or not you have received a refund check and whether or not you have been notified the claim is under audit.
