How to Fix ERTC Claims to Comply With Current IRS Standards
After a flood of scams surrounding the Employee Retention Tax Credit (ERTC), the IRS has temporarily stopped processing new ERTC claims. Legitimate applications may take longer to process, and the IRS now provides businesses with a way to withdraw ERTC claims they may have filed erroneously.
Whether your business fell victim to an ERTC scam or you think you may have made a mistake in filing, a tax attorney can review your case to see if you need to fix ERTC claims that you already filed. Here, the tax credit attorneys at Dayes Law Firm explain how to go about fixing Employee Retention Tax Credit claims.
Can I Withdraw My ERTC Claim?
You can only withdraw your ERTC claim if one of the following is true:
1) The government has not yet paid your credit, or
2) The IRS issued a check, but you haven’t yet cashed it or deposited it.
The good news is that if you withdraw your claim, the IRS will treat it as if you never filed it. This means they will not charge you interest or penalties.
Keep in mind that a withdrawal request asks the IRS not to process your entire adjusted employment tax return. You can only use the withdrawal process if you filed an amended return for the sole purpose of claiming the ERTC, not relating to other adjustments. In addition, you must withdraw the full amount of your ERTC claim rather than seeking a reduction.
If you meet these criteria, you can request a withdrawal. The exact process to follow depends on whether the IRS has issued your refund and whether your claim is under audit.
Can I Fix an ERTC Claim That Is Already Filed?
If you have already collected your ERTC funds, you can’t use the withdrawal process to make changes. However, you may qualify to apply for the Employee Retention Credit Voluntary Disclosure Program in which you voluntarily agree to pay back your credit, minus 20%.
If you need to make an ERTC claim adjustment, rather than withdrawing it completely, you can’t use the withdrawal process either. Instead, correcting errors in ERTC filings requires you to amend your return. If you want to withdraw your ERTC claim and make additional corrections to your employment tax return, you need to prepare a new adjusted return.
In the event that you incorrectly claimed the ERTC, or didn’t claim it despite qualifying, you have three years to amend your affected tax return. Because the ERTC applied to payroll taxes, you would need to file Form 941-X (or Form 943-X, Form 944-X, or Form CT-1X if you originally filed those).
When Should I Contact an Attorney About Repairing ERTC Submissions?
A tax attorney may be able to help you correct your ERTC claim in the following circumstances:
- You submitted your ERTC claim many months ago (more than 6) but haven’t heard back from the IRS.
- The IRS notified you that your ERTC claim is under audit.
- You have concerns about whether your tax credit consultant was legitimate or did a thorough job.
- You’re not sure you have all the documentation required to support your ERTC claim.
- You have questions about whether your business meets the eligibility criteria or whether you properly calculated qualified wages.
- You think you claimed the wrong amount and want help filing ERTC claim corrections.
- You have not yet filed for the credit but think you may qualify.
For more information on rectifying ERTC application issues or filing for the first time, contact the experienced attorneys at Dayes Law Firm. We can help you withdraw or fix ERTC claims and answer any questions you may have.