10/03/2024

IRS Introduces Process for Correcting ERTC Claims

The agency announced these late last week

Last week, the Internal Revenue Service (IRS) announced a supplemental claim process to help tax preparers and other third parties make any necessary corrections to Employee Retention Tax Credit (ERTC) claims.

The ERTC, created by the CARES Act in March 2020, 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" that he attributed to exploitative marketing pushing the credit as a lifeline.

The supplemental claim program is a critical step to improve the IRS' ability to process Employee Retention Credit claims for this more complex segment of taxpayers," said Werfel. "As we continue to accelerate and intensify our work in this area to help qualifying small businesses and protect against improper claims, we continue to explore and develop additional ways to speed our work on this incredibly detailed credit where the number of claims exploded following aggressive marketing."

This supplemental claim process allows a third-party payer that filed a prior claim with multiple clients "withdraw" some claims while maintaining the claims of qualifying clients.

• The deadline to make a supplemental claim is Nov. 22, when the window for the agency’s voluntary disclosure program closes.
• By filing a supplemental claim, the third-party payer is asking the IRS not to process outstanding adjusted employment tax returns for the tax period.
• The IRS has said it will treat claims filed before the supplemental claim as if they were never filed.

This article was provided to OSAP by ASAE's Power of Associations and Inroads.