Why It's Time to Reconsider Your Employee Retention Credit Claim Immediately!

employee retention credit

If you're a small business owner who's been caught up in the Employee Retention Credit, or ERC, debacle, today's video is a must-watch for you. The IRS has just announced a new process that allows you to withdraw incorrect ERC claims. This is a potential life line. Let's dive right in!

What's Going On?

As you may know, the IRS recently hit the pause button on processing new ERC claims.

Why did they do this?

They were swamped with a ton of claims. Some businesses were misled by companies—let's call them "ERC mills"—that pushed the Employee Retention Tax Credit really hard.

Unfortunately, these mills, also known as promoters, often tricked businesses into making claims that weren't legitimate. But the good news is, the IRS just announced a new withdrawal option. A no harm, no foul option, if you’ve been duped by a scammy ERC promoter.

The Employee Retention Tax Credit was a program designed to incentivize small businesses to keep full-time employees on payroll during the pandemic, instead of laying them off.

The IRS just announced, they’re offering a way out. If you've filed an ERC claim but haven't received a refund yet, you can withdraw your claim. This will help you avoid future headaches like repayments, interest, and penalties.

If your claim is still being processed, you can also withdraw it to avoid getting a refund that you're not actually entitled to.

Who Can Use This Option?

You can use this withdrawal process if:

• You made the claim on an amended employment tax return, like Form 941-X.
• You filed the amended return only to claim the ERC and made no other adjustments.
• You want to withdraw the entire amount of your ERC claim.
• The IRS hasn't paid your claim, or they have but you haven't cashed or deposited the refund check.

How to Withdraw Your Claim?

To withdraw your claim, head over to IRS.gov/withdrawmyERC and follow the special instructions. If a professional payroll company filed your claim, consult with them as they may need to submit the withdrawal request for you.

What If You're Under Audit?

If you've been notified that you're under audit, you can send the withdrawal request to the assigned examiner or respond to the audit notice if no examiner has been assigned yet.

What do Experts Think of This?

Experts are calling this almost like an amnesty or a "get out of jail free" card. So, if you're having second thoughts about your ERC claim, now's the time to consult your tax advisor. If you don’t have one, here's my booking link:


I’ll help you if I can, or I’ll direct you to someone else, if I can’t.

Final Thoughts:

This new process is a huge opportunity for small businesses that fell victim to ERC scams. It's a proactive step by the IRS to help you avoid falling victim to these tax fraud traps set by these ERC promoters, with bad intentions, and who won’t be around for very long.

If you feel that you’ve been duped by an ERC promoter, then definitely get a solid second opinion. You don’t want to be in a position with having to pay back tens of thousands of dollars to the IRS, with accumulating penalties and interest, where you could be required to personally, to pay it all back.

Thanks for reading and see you in the next blog post!

About The Author

Noel Lorenzana is an Illinois-licensed, Registered Certified Public Accountant with over 20 plus years of experience.

Through his online educational content, YouTube videos, easy-to-understand courses and 1-on-1 consulting, he gives you the tools to become tax savvy for yourself. 

Disclaimer: Any accounting, business or tax advice contained in this article, is not intended as a thorough, in-depth analysis of specific issues, nor a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties.