News Detail

IRS Sending 20,000 Letters to Taxpayers to Notify Them of Disallowed Claims for the Employee Retention Tax Credit

The Internal Revenue Service (IRS) announced that, as part of its continuing efforts to combat dubious Employee Retention Tax Credit (ERC) claims, it is sending an initial round of more than 20,000 letters to taxpayers notifying them of disallowed ERC claims. IRS is disallowing claims to entities that did not exist or did not have paid employees during the period of eligibility to prevent improper ERC payments from being made to ineligible entities.

The IRS is sending these letters as it continues increased scrutiny of ERC claims that SWACCA highlighted on September 7, 2023 in response to misleading marketing campaigns targeting small businesses and other organizations. The IRS mailing list is the latest in an expanded compliance effort that includes a special withdrawal program for those with pending claims who realize they may have filed an inaccurate return. Later this month, a separate voluntary disclosure program will be unveiled allowing those who received questionable payments to come in and avoid future IRS action.

For more information on ERC eligibility, see the ERC frequently asked questions and the ERC Eligibility Checklist, which is available as an interactive tool or as a printable guide.

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