IRS Announced Preemptive Denial of Some ERC Claims

December 6, 2023 by Max Shenker

The IRS posted a news release on Wednesday, December 6, 2023, announcing that they are notifying 20,000 taxpayers of disallowed ERC claims. These disallowances are for entities that did not exist prior to 2022 or entities that had no record of paying wages during the ERC eligibility period.

These two issues align with the few criminal prosecutions with publicly available details.  

The news release also announced that the voluntary disclosure program, originally announced on September 14 as part of the processing moratorium, will be unveiled “later this month.” The voluntary disclosure program is intended to allow those who received ERC payments that they now believe to be incorrect to return those funds to the IRS and avoid future IRS action.

As alluded to in an IRS webinar on November 2, the ERC withdrawal program, in which taxpayers who filed ERC claims but have yet to receive refunds from the IRS can withdraw those claims, may not be available for much longer. The new release states, “Taxpayers have until at least the end of the year to request a withdrawal.”

The release also notes that “The IRS plans additional letters beyond the disallowance letters” but does not explain what the nature of those future letters will be.

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