Daily Update from Wouch Maloney - CPA in Horsham & Philadelphia

IRS Announces Process to Withdraw ERC Claim

Yesterday, October 19, 2023, the IRS released information on how to withdraw an ERC claim. In the release, the IRS wrote “for those who filed a claim requesting a refund for an Employee Retention Credit (ERC or ERTC) and would now like to withdraw your claim, details as to whether you can do so and, if so, how to withdraw your claim are available from the IRS.”

Scams and Aggressive Marketing Tactics

As many of you may recall, in September, the IRS issued a moratorium on processing new claims through year’s end. IRS Commissioner Danny Werfel issued the moratorium due to “growing concerns inside the tax agency, from tax professionals as well as media reports that a substantial share of new claims from the aging program are ineligible and increasingly putting businesses at financial risk by being pressured and scammed by aggressive promoters and marketing.”

The moratorium will allow the IRS to add more safeguards to prevent future abuse and protect businesses from predatory tactics, as the IRS works with Justice Department to pursue fraud fueled by aggressive marketing tactics.

ERC Audits and Investigations

Over $2.8 billion of potentially fraudulent Employee Retention Credit claims were part of an IRS Criminal Investigation (IRS-CI). On July 31, 2023, the IRS wrote “Of those, 15 of the 252 investigations have resulted in federal charges. Of the 15 federally charged cases, so far six matters have resulted in convictions, four of those cases have reached the sentencing phase with the average sentence being 21 months.” Criminal Investigation’s work is in addition to ERC audits that have already begun.

The IRS has already referred thousands of ERC cases for audit.

We will continue to provide updates as additional information is received. If you have questions about this update or other accounting, tax or advisory services, please call 215.675.8364 or email us to speak with a CPA today.

DISCLAIMER: The WM Update, WM Wednesday Wisdom, WM Daily Update, and other related communications are intended to provide general information, as of the date of this communication, and may reference information from reputable sources. Although our firm has made every reasonable effort to ensure that the information provided is accurate, we make no warranties, expressed or implied, on the information provided. As legislative efforts are still ongoing, we expect that there may be additional guidance and clarification from regulators that may modify some of the provisions in this communication. Some of those modifications may be significant. As such, be aware that this is not a comprehensive analysis of the subject matter covered and is not intended to provide specific recommendations to you or your business with respect to the matters addressed.