The IRS has issued an important alert for businesses regarding the Employee Retention Credit (ERC), a measure introduced during the COVID-19 pandemic to aid eligible businesses and tax-exempt organizations. If your business has taken advantage of the ERC, it's crucial to ensure your claim aligns with the program's eligibility requirements. Misinformation, often spread by overzealous promoters, has led some honest businesses astray. Here's what you need to know to navigate this situation effectively:

The IRS encourages businesses to review their ERC claims to confirm eligibility. Given the complexities of the ERC rules, this step is essential to prevent future issues such as penalties and interest. A proactive review is critical if your business received guidance from external promoters without your best interests in mind.

The IRS has initiated a Voluntary Disclosure Program (VDP) available until March 22, 2024. If your business mistakenly claimed the ERC, participating in this program allows you to rectify the error by repaying 80% of the credit received, which can significantly reduce potential penalties. This deadline is critical, and seeking assistance from a tax resolution specialist may be beneficial to navigate the process smoothly. If you cannot afford to pay the 80%, we may be able to assist you with establishing an Installment Agreement with the IRS to keep levies and penalties at bay.

The IRS offers a withdrawal program if your ERC claim is still pending. This option is vital for businesses that, upon review, realize they do not meet the eligibility criteria. Withdrawing an unprocessed claim can prevent the reception of undeserved funds, helping your business avoid subsequent penalties and the hassle of repayment.

The IRS has made various resources available to assist businesses with their ERC concerns. These include frequently asked questions, an eligibility checklist, and free recorded webinars. Leveraging these tools can provide clarity and guide your decision-making process regarding the ERC.

“While the Employee Retention Credit is a wonderful benefit, make sure you are eligible to receive these benefits. The IRS stopped this program in late August due to fraud, however, I expect them to start working on the amended tax returns soon” said Ben Golden, Owner and CEO of IRS Trouble Solvers, LLC and Golden Tax Relief.

Following a surge in aggressive marketing practices around the ERC, the IRS implemented a moratorium on processing new claims as of September 14. While the IRS continues to process claims submitted before this date, businesses should expect delays and increased scrutiny. This situation underscores the importance of accurate and compliant claims.

Michael Duhn, a tax attorney with IRS Trouble Solvers, shared “Unfortunately, there were several unscrupulous companies that promised ERC benefits to individuals and businesses that may not have qualified. It is extremely important to rectify these errors if you are a victim of these aggressive marketing tactics. This deadline has been set, and we can help mitigate the losses or any potential balances due if you act quickly.”

For businesses navigating the complexities of the ERC, understanding and complying with IRS guidelines is paramount. Whether you're considering voluntary disclosure, withdrawing an unprocessed claim, or simply seeking to ensure your business's compliance, the right information and guidance are key. The experience of an Enrolled Agent and Certified Tax Resolution Specialist can provide valuable support throughout this process, ensuring that your business remains on solid ground while navigating these tax challenges. At IRS Trouble Solvers, our seasoned staff can help you navigate these tax challenges effectively.