The Internal Revenue Service has announced a special withdrawal process for employers who may have falsely filed for the Employee Retention Tax Credit (ERC). 

The ERC was created for businesses whose employees were affected during the COVID-19 pandemic. The credit is available to eligible employers that paid qualified wages to some or all employees after March 12, 2020, and before January 1, 2022. Eligibility and credit amount vary depending on when the business impacts occurred. 

But just as soon as the credit was made available to employers, scammers quickly took advantage of businesses and filed false claims on their behalf while charging businesses a fee. While many false claims were initially approved and payments were sent out, the IRS is now halting most ERC payments while it conducts an extensive audit to combat rampant fraud. 

Courtney Kincaid, President and CEO of the Indiana CPA Society, says the IRS is also offering a special initiative aimed at helping businesses concerned about ineligible claims. In addition to stopping payments, the IRS is allowing employers to withdraw possible fraudulent active claims without penalty. 

The IRS has also stopped processing new claims and has halted payments while they continue to audit active claims. Kincaid said these delays can be expected to last for the rest of the year while audits continue, and you can expect delays if you have submitted a new claim.    

For organizations that were scammed into filing false claims and have received checks, the IRS says not to cash the checks and, after voiding the check, to mail it back to the IRS. The IRS strongly recommends going through your payroll processor to withdraw your claim.  

To avoid these scams, the IRS says to watch for warning signs like offers being made that are too good to be true. They also tell business owners to only work with trusted agents with previous experience advising their business.  

To learn more, visit www.incpas.org.