Navigating the Employee Retention Credit (ERC) can be complex, especially if you need to withdraw a previously filed claim. As of June 20, 2024, the IRS still has more than 1.4 million unprocessed ERC claims to sort through with a lot of those claims being fraudulent or incorrectly stated. If you believe you have submitted an improper claim, then the Special IRS Withdrawal Program remains open for taxpayers with unprocessed claims.
The IRS outlines a withdrawal process for businesses that incorrectly file a claim so they can avoid penalties or interest. The guide below is based on information provided by the IRS will clarify whether you can withdraw your ERC claim and outline the steps for doing so.
Criteria for Withdrawing an ERC Claim
To withdraw a claim, the filer must meet all the following criteria:
- You made the claim on an adjusted employment tax return
- You filed your adjusted return only to claim the ERC
- You want to withdraw the entire amount of the claim
- The IRS has not yet paid your claim, or you have not deposited your refund
Identifying Your Claim Category
Depending on the status of your claim, you will fall under one of three categories to determine what steps you need to take in the process.
- You have not received a refund and have not been notified that your claim is under audit
- You have not received a refund, and you have been notified that your claim is under audit
- You received a refund check but have not cashed or deposited yet
Steps to File a Withdrawal
You must follow the following steps based on your category to file your withdrawal. Once you submit your withdrawal, the IRS will notify you if your claim was accepted or rejected.
Category 1: You have not received a refund and have not been notified that your claim is under audit
- Make a copy of the adjusted return with the claim you wish to withdraw.
- In the left margin of the first page, write “Withdrawn.”
- In the right margin of the first page:
- Have an authorized person sign and date it.
- Write their name and title next to their signature.
- Fax the signed copy of your return using your computer or mobile device to the IRS’s ERC claim withdrawal fax line at 855-738-7609. Keep your copy with your tax records.
Category 2: You have not received a refund, and you have been notified that your claim is under audit
- If you’ve been assigned an examiner, communicate with your examiner about how to submit your withdrawal request directly to them.
- If you haven’t been assigned an examiner, respond to your audit notice with your withdrawal request, using the instructions in the notice for responding.
Category 3: You received a refund check but have not cashed or deposited yet
- Make a copy of the adjusted return with the claim you wish to withdraw.
- In the left margin of the first page, write “Withdrawn.”
- In the right margin of the first page:
- Have an authorized person sign and date it.
- Write their name and title next to their signature.
- Write “void” in the endorsement section on the back of the refund check.
- Include a note that says, “ERC Withdrawal,” and briefly explain the reason for returning the refund check.
- For your tax records, make copies of the front and back of the voided check, the explanation notes, and the signed and dated withdrawal request page.
- Don’t staple, bend, or paper clip the voided check; include it with your claim withdrawal request and mail (do not fax) it to the IRS at:
Cincinnati Refund Inquiry Unit
PO Box 145500
Mail Stop 536G
Cincinnati, OH 45250
- Track your package to confirm the delivery
Navigating the ERC Process
Successfully withdrawing an ERC claim requires careful attention to the specific criteria and procedures set by the IRS. By following the specific steps, you can ensure that your claim is correctly withdrawn without incurring penalties or interest. Whether your claim is unpaid, under audit, or you have an uncashed refund check, understanding your category and adhering to the correct withdrawal process is crucial. Remember to keep detailed records of all correspondence and submissions and to consult a trusted tax professional if you have further questions.
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