Important Update on IRS Employee Retention Credit (ERC)

Important Update on IRS Employee Retention Credit (ERC)

We’re here to bring you crucial information concerning the IRS’s stance on the Employee Retention Credits (ERC), a significant relief effort introduced during the COVID-19 pandemic to support businesses in retaining employees through challenging times in 2020 and 2021.

As background, the ERC was aimed at businesses experiencing a sharp decline in gross receipts or those impacted by government orders related to COVID-19, providing them with a potential avenue for tax credits. The IRS has clarified these provisions through a series of FAQs.

Recent developments have seen the emergence of third-party providers offering services to help businesses claim the ERC. Unfortunately, some practices have led to the abuse of the program, prompting the IRS to halt the processing of new claims and to scrutinize these organizations closely.

Given the IRS’s increased vigilance, we urge our clients to reevaluate their ERC claims, especially those facilitated by non-CPA third-party providers. Our team is here to assist in reviewing your claims to ensure they meet the IRS’s criteria and to navigate any potential issues, including:

  • Verifying the validity of your filed claim.
  • Assessing the robustness of your documentation against IRS expectations.
  • Advising on the necessity of returning funds, if applicable.
  • Discussing the option of withdrawing your claim if it is still pending.
  • Exploring participation in the ERC Voluntary Disclosure Program by March 22, 2024, allowing for a favorable resolution with the IRS.

The IRS is allowing businesses that might not fully meet the ERC eligibility criteria a chance to withdraw their claims or return funds without penalty through a special Voluntary Disclosure Program. This is a limited-time offer from the IRS, available until March 22, 2024.

For guidance on the ERC, potential risks, and IRS programs, please don’t hesitate to contact us at RJI CPAs. We are here to support you through these complex issues and look forward to discussing how we can help.

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