It is essential that claims for Employee Retention Credits be made by business owners with complete understanding of the eligibility requirements as well as the consequences for improper, erroneous or fraudulent claims.

Taxpayers who question their claim may contact Frazier Law at (615) 267-0125 or (989) 704-6560 for an independent ERC review.

Key Features of the Withdrawal Process:

1. Employers who have submitted an ERC claim but have not received a refund can opt to withdraw to bypass future repayment, interest, and penalties.
2. The withdrawal process assists businesses that were misled into filing ineligible ERC claims by overzealous promoters. Claims retracted will be considered as unfiled, and no penalties or interest will be levied by the IRS.
3. It’s important to note that if someone deliberately filed a fraudulent claim or was part of such activities, the withdrawal won’t shield them from potential criminal consequences.

IRS Commissioner Danny Werfel emphasized the agency’s commitment to supporting small businesses that were influenced by aggressive ERC marketing schemes. Werfel encouraged employers with pending claims to consider this withdrawal option.

About the Employee Retention Credit (ERC):

The ERC, or Employee Retention Tax Credit, is a refundable tax credit for businesses that kept employees on their payroll during specific periods of the COVID-19 pandemic. It is aimed at companies affected by government-mandated operational suspensions or substantial revenue drops. The credit is not available for individual taxpayers.

Since its inception, approximately 3.6 million claims have been filed for the ERC. The IRS is intensifying its audit efforts on dubious claims and has numerous ongoing criminal investigations related to the credit.

Recent Developments:

A recent halt on processing new ERC claims was announced on September 14, mainly due to the surge of ineligible claims. This pause will extend until the end of the year. Claims made prior to this date will continue to be processed, albeit at a reduced speed owing to comprehensive compliance checks.

Guidelines on Withdrawing an ERC Claim:

To qualify for the withdrawal process, employers should meet the following criteria:

• Claims were made using specific adjusted employment returns.
• The adjusted return was solely for the ERC without any other modifications.
• They intend to retract the entire amount of the ERC claim.
• The IRS has either not paid the claim or, if paid, the refund check hasn’t been cashed or deposited by the employer.

Details on the withdrawal process can be found on the IRS website. The IRS also offers resources, including an upcoming webinar and an interactive eligibility checker for the ERC.

Beware of Scams:

The IRS has noted new tactics from scammers post the September 14 moratorium announcement. There have been cases of promoters persuading businesses into availing expensive upfront loans expecting a refund. The IRS urges taxpayers to be vigilant and be aware of the signs of ERC-related scams. The IRS continues to advocate for employers to consult trusted tax professionals and be cautious about promoters looking to exploit them.

• Stay Updated with Changing Tax Laws: Tax laws and regulations change frequently. Business owners must stay updated to ensure they are compliant and avoid costly penalties. A tax consultant will provide current information and guide businesses through any recent changes.
• Maximize Deductions: Many business owners are unaware of the numerous deductions available to them. A tax planning session can illuminate these potential savings, ensuring business owners aren’t overpaying on their taxes.
• Cash Flow Management: Effective tax planning can improve a company’s cash flow. By understanding tax liabilities and planning ahead, businesses can manage their finances more efficiently.
• Avoid Costly Mistakes: The punitive implications of tax errors can be severe. A tax consultant can help identify and rectify potential issues before they become major problems.
• Strategic Business Planning: Tax planning isn’t just about compliance; it’s a strategic tool. A consultation can help business owners make informed decisions, from investment strategies to hiring practices, all tailored to their specific tax situation.
• Peace of Mind: With a professional overseeing their tax strategy, business owners can focus on what they do best – running their businesses. They can rest assured that they are minimizing liabilities and making the most of any available tax benefits.

You can schedule your tax planning consultation today by calling (615) 267-0125 or (989) 704-6560.

About Charles R. Frazier JD LLM

Charles R Frazier is the principal attorney for Frazier Law, a tax, estate and business law firm with offices in Middle Tennessee and Central Michigan. Charles writes and speaks nationally on topics of tax planning, tax controversy & defense, business and succession planning, and estate planning. Charles is a member of bar in the states of Michigan, Tennessee and Texas. Mr. Frazier can be scheduled for consultations or interviews at (615) 267-0125 or (989) 704-6560.

The October 16th deadline applies to taxpayers who requested a six-month extension to file their 2022 tax return. The extension provides extra time to file but does not extend the time to pay any taxes owed. Those who haven’t settled their tax bill should do so immediately to minimize any additional interest and penalties.

Key Points to Remember:

• Ensure Accuracy: Double-check all information on the return to avoid potential errors or discrepancies.
• E-file for Speed: Electronic filing (e-filing) is the fastest, most efficient way to submit a tax return and receive a refund if one is due.
• Payment Options: If you owe taxes, consider direct pay options available through the IRS, or set up an installment agreement if you cannot pay in full.
• Refunds: For those expecting a refund, the IRS’s “Where’s My Refund?” tool provides updates within 24 hours of e-filing or four weeks after mailing a return.
• Seek Help if Needed: If you have questions or uncertainties, contact our office at (989) 704-6560 or (615) 267-0125 to schedule a consultation to discuss your tax situation.

Taxpayers who miss the October 16th extension deadline can face penalties, additional interest charges, and potential legal consequences. It’s crucial to act promptly and ensure compliance.

For more information, guidance, and resources on tax deadlines, visit the official IRS website at www.irs.gov.

About Rick Miller, CPA

Rick Miller is the Director of Tax & Business Services for Frazier and directs the Great Lakes office in Midland, Michigan. He leads the tax preparation team and works with the legal side of Frazier when handling tax controversy cases. He can be reached at rick@frazier.law or at (989) 704-6560.