What to know as IRS kicks off withdrawal option for pandemic-era small business tax credit
The Good Brigade | Digitalvision | Getty Images
“This is a game-changer,” said Eric Hylton, national director of compliance for Alliantgroup, a firm that has been reviewing ERC claims for other tax professionals.
“I’m actually shocked at some of the horror stories we’ve been seeing,” said Hylton, who is a former IRS commissioner for the agency’s small business and self-employed division.
It’s a ‘mulligan moment’
If you’ve neither received an ERC refund nor cashed your ERC refund check, there’s still time to withdraw your filing, according to the agency. You may qualify if you meet three conditions: you made the claim on an adjusted employment tax return, only changed your filing for the ERC and want to withdraw the entire claim.
You can find the complete details on eligibility and how to withdraw your claim at IRS.gov/withdrawmyERC.
“It’s a mulligan moment,” said Dean Zerbe, national managing director at Alliantgroup. He said the withdrawal option is an opportunity to fix mistakes before the IRS catches them.
Currently, there’s an IRS backlog of unprocessed ERC filings. As of Oct. 11, the agency estimated a backlog of 849,000 Forms 941-X, which includes ERC claims.
Small businesses should take the opportunity to “sharpen their pencil” and review their pending ERC filings with a tax professional, Zerbe said, pointing to the strict eligibility requirements. “Business owners can’t just whistle by the graveyard.”
“Think long and hard about what you’re doing here because the IRS is going to be all over this,” he added.
How to handle processed ERC claims
If the IRS already processed your ERC claim and you cashed the refund check, Hylton still recommends reviewing the filing with a tax professional to see if an amendment is necessary.
For example, it’s possible you only qualified to receive the ERC for two quarters but claimed the credit for four or six quarters, he said. Whether you need to make a minor change or major correction, it’s critical to “address the issue as soon as possible,” Hylton said. “You want to be ahead of them.”
Don’t miss these CNBC PRO stories:
This article was originally published by a Cnbc.com. Read the Original article here. .
