Background:

The IRS has placed it’s popular employee retention tax credit program on hold.  Claims filed after September 14, 2023 will be placed on hold until at least the end of the year.

The Problem:

The IRS is concerned that firms that have sprung up since the credit’s creation have urged taxpayers to file claims that did not qualify for the credit.  We have reviewed claims that were approved by these firms and found that the taxpayer did not qualify for the credit.  If a refund is disallowed upon audit, the taxpayer would have to pay back the refund and would also have to pay a 20% penalty.

What Should Taxpayers Do?

Taxpayers who are considering filing a claim who have not yet filed should have a qualified tax advisor review their claim before it is filed.

Taxpayers who have already filed a claim should have a qualified tax advisor review their claim to see if it should be withdrawn.

Consequences of an Improper Claim:

            1.         Repayment of funds received with interest and penalty added on will be required if funds have been received.  A penalty will also be imposed.  If funds have not yet been received, penalties may be avoided if the claim is withdrawn.

            2.         If funds have not yet been received, penalties could still be imposed.