A Post to Understanding IR-2023-193

[Julio Gonzalez]

In a recent post (linked here), I discussed the moratorium that was issued on Employee Retention Tax Credit (ERTC) claims. IR-2023-193 was recently issued as a follow up to include details on the new withdrawal process for ERTC claims.

ERTC can be very beneficial to your business strategy, so it’s important to understand these changes and whether or not you are eligible. It has been a life saver for many businesses that were impacted by COVID-19. It helped act as a stabilizer for the broader economy as well as businesses by incentivizing employers to keep their staff employed by offering them a tax credit for doing so. The IRS reported that over 3.6 million ERTC claims were filed as of the middle of September 2023. This shows how important its role is in supporting communities and saving jobs.

The IRS implemented a new withdrawal process to help alleviate issues with fraudulent or incorrect claims being filed that could potentially endanger companies. Simple mistakes have the possibility of triggering a penalty, so this new process is intended to be a safeguard for businesses.

Who is eligible to withdraw an ERTC claim? Employers that meet ALL of the following criteria:

• 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.

I determined that I’m eligible, but how do I withdraw my ERTC claim?

• Submit a written request to the IRS
• Include documentation supporting the withdrawal
• Await IRS confirmation that the claim is officially withdrawn

Here are the formal steps for withdrawing an Employee Retention Credit claim.

Withdrawn claims will not incur any penalties unless they are fraudulent. Addressing the previous moratorium, the IRS will now resume processing of the ERTC claims received prior to September 14th, 2023. However, claims submitted after that date will not be processed until after the new year.

If you have questions about the ERTC claims, I highly recommend reaching out to your CPA or other tax professional, or feel free to comment below.