IRS Urging Businesses to Review ERTC Claims

The IRS is urging businesses that filed Employee Retention Tax Credit (ERTC) claims to review their qualifications for the tax break before a March 22 voluntary disclosure deadline.

The voluntary disclosure program allows businesses or nonprofits that filed a claim in error and received a payment to repay just 80% of the claim.

The ERTC was a lifeline to small businesses and nonprofit groups struggling to keep their employees on their payrolls during the COVID-19 pandemic. Last September, IRS Commissioner Danny Werfel ordered the agency to immediately stop processing new ERTC claims due to a “surge of questionable claims.”

“Many businesses were wildly misled about the qualifications, and the IRS is taking a special step to highlight common problems being seen about these claims,” Werfel said last week. “The IRS urges ERC claimants to get with a trusted tax professional and review their qualifications before time runs out on IRS disclosure and withdrawal programs.”

The IRS has posted a list of warning signs that could signal future IRS problems involving ERTC claims on its website.