News & Updates

How it works

Taxpayers must have earned income to claim this credit. The credit is calculated based on income and a percentage of expenses incurred for the care of qualifying people to enable taxpayers to work, look for work or attend school.

• Depending on income, taxpayers can get a credit worth up to 35% of their qualifying childcare expenses. At minimum, it’s 20% of those expenses. For 2024, the maximum eligible expense for this credit is $3,000 for one qualifying person and $6,000 for two or more.

• Reimbursed expenses, such as from a state social services agency, must first be deducted as work-related expenses used to calculate the amount of the credit.

• The amount of work-related expenses used to figure the credit generally cannot be more than earned income for the year if single, or the smaller of a spouse’s income, if married.

• Taxpayers who claim it must list the name and address of the day camp on their return, along with the taxpayer identification number unless an exception applies.

IRS Publication 503, Child and Dependent Care Expenses, explains all the rules, the tests needed to claim the credit and describes an exception for certain taxpayers living apart from their spouse and meeting other requirements. Taxpayers can also use the Interactive Tax Assistant on IRS.gov to determine if they can claim this credit.

‍

Taxpayers should file their annual return after completing the pre-filing registration process. A timely filed return (including extensions) is required to make an elective payment election. Electronic return filing, if not required, is strongly encouraged.

Taxpayers who file their return electronically can review information about IRS approved-e-file providers to find a Modernized e-File (MeF) provider, and should confirm that the software chosen supports all necessary forms, such as Form 3800, General Business Credit, and forms required to figure and report each credit.

The Inflation Reduction Act and the CHIPS Act of 2022 allow taxpayers to take advantage of certain manufacturing investment, clean energy investment and production tax credits through elective pay or transfer.

Elective payment and the transfer election create alternative ways for applicable entities and eligible taxpayers who have earned one of the IRA clean energy or the CHIPS credits to get the benefit of the credit even if the taxpayer cannot use the credit to offset their tax liability.

Taxpayers who intend to make an elective payment or credit transfer election must earn the credit, which means they must make a tax credit qualifying investment or undertake tax credit qualifying production activities to earn a credit eligible for an elective payment or transfer election.

The taxpayer must complete the pre-file registration process to receive a registration number. The registration number must be included on the taxpayer’s annual return as part of making a valid election. Complete and submit the pre-filing registration request no earlier than the beginning of the tax year in which the taxpayer will earn the credit related to an elective payment election or transfer election.

The IRS recommends that taxpayers submit the pre-filing registration at least 120 days prior to when the organization or entity plans to file its tax return on which it will make its election. This should allow time for IRS review, and for the taxpayer to respond if the IRS requires additional information before issuing the registration numbers.

The IRS will share information about the status of a taxpayer’s pre-file registration package exclusively through the IRA/CHIPS Pre-Filing Registration tool. If the taxpayer affirmatively opts in to receive email communications, the IRS will notify the taxpayer by email that the status of a registration package has changed.

Taxpayers are not required to opt in to receiving email notifications. However, if they choose not to opt in to receive email notifications, they are responsible to return to the IRA/CHIPS Pre-Filing Registration tool to monitor the status of the registration packages.

The IRS is hosting office hour sessions to assist organizations with the pre-filing registration process and the IRA/CHIPS Pre-filing Registration Tool for elective payment and transferability of clean energy and CHIPS credits. Subject matter experts from Large Business & International and Tax-Exempt/Government Entities are available to answer questions.

‍

As part of a special eight-part series, the IRS and Summit partners highlighted the newly updated Publication 5708, Creating a Written Information Security Plan for your Tax & Accounting Practice PDF. This Written Information Security Plan, or WISP, is a 28-page template designed to help tax pros, particularly smaller practices. The WISP has been updated and expanded to make data security planning easier.

The new WISP, the result of a year-long effort, is an easy-to-understand document developed by and for tax and industry professionals to keep customer and business information safe and secure. Tax pros are required to have a security plan under federal law.

The new version of the WISP includes several new information updates since the first version came out. This includes highlighting best practices for implementing multi-factor authentication for any individual accessing any information system, unless their qualified individual has approved in writing the use of reasonably equivalent or more secure access controls.

In addition, tax pros now need to report a security event affecting 500 or more people to the Federal Trade Commission (FTC) as soon as possible, but no later than 30 days from the date of discovery. This is in addition to reporting the incident to an IRS Stakeholder Liaison and state tax authorities.

“Tax professionals play a vital role in the nation’s tax system, and they hold a vast amount of taxpayer information that can be a treasure trove to identity thieves,” said IRS Commissioner Danny Werfel. “The newly updated Written Information Security Plan provides a helpful road map for tax pros to help protect their clients and themselves from the constant threat of data breaches. The IRS and the Security Summit partners urge tax pros to stay on top of these evolving threats, and this updated plan is an important part of that effort.”

This marks the sixth part of a special summer news release series focused on tax professional security. Now in its ninth year, the Protect Your Clients; Protect Yourself campaign provides timely tips to help protect sensitive taxpayer data that tax professionals hold while also protecting their own businesses from identity thieves.

This is part of an annual education effort by the Security Summit, a group that includes tax professionals, industry partners, state tax agencies and the IRS. The public-private partnership has worked since 2015 to protect the tax system against tax-related identity theft and fraud.

These security tips and the newly updated WISP are a key focus of the Nationwide Tax Forum, being held this summer in five cities throughout the U.S. In addition to the series of eight news releases, the tax professional security component is featured at the three-day continuing education events. The forums continue this week in Baltimore, as well as the weeks of August 19 in Dallas and September 9 in San Diego. The IRS reminds tax pros that registration deadlines are quickly approaching for the Dallas forum, as San Diego has already sold out.

The forums will feature several specific sessions to help educate the tax professional community on security-related topics. Tax professionals will hear from experts at the IRS, the tax professional community as well as a special session from Salve Regina University’s Pell Center from Rhode Island.

In the remaining weeks, the news release series and the IRS Tax Forums will provide timely tips to help protect sensitive taxpayer data that tax professionals hold while also protecting their own businesses from identity thieves.

Tax professionals are required by law to secure their clients’ data, and to help them meet this obligation, the IRS and the Security Summit partners are advising them to use the WISP template designed to make data security planning easier.

Knowing that tax professionals play a critical role in our nation's tax system, the Summit – led by the Tax Professionals Working Group – spent months originally developing two publications: Publication 5708, Creating a Written Information Security Plan for your Tax & Accounting Practice PDF and Publication 5709, How to Create a Written Information Security Plan for Data Safety PDF. Publication 5708 is the WISP, and Publication 5709 is a special summary flyer designed to be shared among the tax professional community.

“It’s more important than ever for tax pros to protect their data, passwords and other information,” said Kimberly Rogers, director of the IRS Return Preparer Office and co-chair of the Summit's Tax Pro Working Group. “The updated Written Information Security Plan is a result of months of work by tax professionals across the country. The Security Summit members worked together on this plan to make it easier for all tax professionals to develop a plan and an approach that is right for them.”

As part of legal requirements to implement and maintain a WISP in their practices, tax pros need to have it in a written form that’s accessible. In addition, tax professionals are recommended to review, test and update their WISPs.

The basics of a WISP

The WISP, available in Publication 5708 PDF, begins with the basics. It walks users through getting started on a plan, including understanding security compliance requirements and professional responsibilities. It continues with an outline for a basic WISP and a sample template. The sample is not intended to be the final word on written security plans, but it is intended to give tax professionals a place to start in understanding and attempting to draft a plan for their business.

Throughout the process, tax pros are reminded that a security plan should be appropriate to the company’s size, scope of activities, complexity and the sensitivity of the customer data it handles. There is no one-size-fits-all WISP.

The IRS also reminds tax professionals that a WISP is just one part of what they need to protect their clients and themselves. Given the rapidly evolving nature of threats, the Summit also strongly encourages tax professionals to consult with technical experts to help with security issues and safeguard their systems.

A good WISP focuses on three areas:

• Employee management and training;
• Information systems;
• Detecting and managing system failures.

Tax pros required by law to have a security plan

There are many aspects to running a successful business in the tax preparation industry, including reviewing tax law changes, learning software updates as well as managing and training staff. One often overlooked but critical component is creating a WISP. However, federal law requires all professional tax preparers to create and implement a data security plan.

The Gramm-Leach-Bliley Act (GLBA) requires financial institutions to protect customer data. Under this law, tax and accounting professionals are considered financial institutions, regardless of size. In its implementation of this law, the FTC issued measures required to keep customer data safe. One requirement is implementing a WISP.

As a part of the plan, the FTC requires each firm to:

• Designate one or more employees to coordinate its information security program.
• Identify and assess risks to customer information in each relevant area of the company's operation and evaluate the effectiveness of the current safeguards for controlling these risks.
• Design and implement a safeguards program and regularly monitor and test it.
• Select service providers that can maintain appropriate safeguards by ensuring the contract requires them to maintain safeguards and oversee their handling of customer information.

Evaluate and adjust the program considering relevant circumstances, including changes in the firm's business or operations, or the results of security testing and monitoring.

Tax pro with a security problem? Contact an IRS Stakeholder Liaison, states and FTC

As part of a security plan, the IRS also recommends tax professionals create a data theft response plan, which includes contacting their IRS Stakeholder Liaison to report a security incident. Tax professionals can also share information with the appropriate state tax agency by visiting a special Report a Data Breach page with the Federation of Tax Administrators.

Tax professionals should also understand the FTC data breach response requirements PDF as part of their overall information and data security plan. The new WISP also includes information on the requirement to report an incident to the FTC when 500 or more people are affected within 30 days of the incident.

‍

The IRS is offering relief to any area designated by the Federal Emergency Management Agency (FEMA). Currently, this applies to:

• All 46 counties in South Carolina.
• The following 61 counties in Florida: Alachua, Baker, Bay, Bradford, Brevard, Calhoun, Charlotte, Citrus, Clay, Collier, Columbia, DeSoto, Dixie, Duval, Escambia, Flagler, Franklin, Gadsden, Gilchrist, Glades, Gulf, Hamilton, Hardee, Hendry, Hernando, Highlands, Hillsborough, Holmes, Jackson, Jefferson, Lafayette, Lake, Lee, Leon, Levy, Liberty, Madison, Manatee, Marion, Monroe, Nassau, Okaloosa, Okeechobee, Orange, Osceola, Pasco, Pinellas, Polk, Putnam, Santa Rosa, Sarasota, Seminole, St. Johns, Sumter, Suwannee, Taylor, Union, Volusia, Walton, Wakulla and Washington.
• The following 55 counties in Georgia: Appling, Atkinson, Bacon, Ben Hill, Berrien, Brantley, Brooks, Bryan, Bulloch, Burke, Camden, Candler, Charlton, Chatham, Clinch, Coffee, Colquitt, Cook, Crisp, Decatur, Dodge, Echols, Effingham, Emanuel, Evans, Glynn, Grady, Irwin, Jeff Davis, Jefferson, Jenkins, Johnson, Lanier, Laurens, Liberty, Long, Lowndes, McIntosh, Mitchell, Montgomery, Pierce, Richmond, Screven, Tattnall, Telfair, Thomas, Tift, Toombs, Treutlen, Turner, Ware, Wayne, Wheeler, Wilcox and Worth.
• The following 66 counties in North Carolina: Alamance, Anson, Beaufort, Bertie, Bladen , Brunswick, Camden, Carteret, Caswell, Chatham, Chowan, Columbus, Craven, Cumberland, Currituck, Dare, Davie, Davidson, Duplin, Durham, Edgecombe, Forsyth, Franklin, Gates, Granville, Greene, Guilford, Halifax, Harnett, Hertford, Hoke, Hyde, Johnston, Jones, Lee, Lenoir, Martin, Montgomery, Moore, Nash, New Hanover, Northampton, Onslow, Orange, Pamlico, Pasquotank, Pender, Perquimans, Person, Pitt, Randolph, Richmond, Robeson, Rockingham, Sampson, Scotland, Stokes, Surry, Tyrrell, Vance, Wake, Warren, Washington, Wayne, Wilson and Yadkin.

Individuals and households that reside or have a business in any one of these localities qualify for tax relief. The same relief will be available to any other counties added later to the disaster area. The current list of eligible localities is always available on the Tax relief in disaster situations page on IRS.gov.

Filing and payment relief

The tax relief postpones various tax filing and payment deadlines that occurred beginning on Aug. 1, 2024, in Florida, Aug. 4, 2024, in Georgia and South Carolina, and Aug.5, 2024, in North Carolina. The relief period continues through Feb. 3, 2025 (postponement period), in all four states. As a result, affected individuals and businesses will have until Feb. 3, 2025, to file returns and pay any taxes that were originally due during this period.

This means, for example, that the Feb. 3, 2025, deadline will now apply to:

• Any individual, business or tax-exempt organization that has a valid extension to file their 2023 federal return. The IRS noted, however, that payments on these returns are not eligible for the extra time because they were due last spring before the hurricane occurred.
• Quarterly estimated income tax payments normally due on Sept. 16, 2024, and Jan. 15, 2025.
• Quarterly payroll and excise tax returns normally due on Oct. 31, 2024, and Jan. 31, 2025.

In addition, in Florida, penalties for failing to make payroll and excise tax deposits due on or after Aug. 1, 2024, and before Aug. 16, 2024, will be abated, as long as the deposits are made by Aug. 16, 2024. Similarly, in South Carolina and Georgia, penalties for failing to make payroll and excise tax deposits due on or after Aug. 4, 2024, and before Aug. 19, 2024, will be abated, as long as the deposits are made by Aug. 19, 2024. In North Carolina, penalties for failing to make payroll and excise tax deposits due on or after Aug. 5, 2024, and before Aug. 20, 2024, will be abated, as long as the deposits are made by Aug. 20, 2024.

The Disaster assistance and emergency relief for individuals and businesses page has details on other returns, payments and tax-related actions qualifying for relief during the postponement period.

The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area. These taxpayers do not need to contact the agency to get this relief.

It is possible an affected taxpayer may not have an IRS address of record located in the disaster area, for example, because they moved to the disaster area after filing their return. In these unique circumstances, the affected taxpayer could receive a late filing or late payment penalty notice from the IRS for the postponement period. The taxpayer should call the number on the notice to have the penalty abated.

In addition, the IRS will work with any taxpayer who lives outside the disaster area but whose records necessary to meet a deadline occurring during the postponement period are located in the affected area. Taxpayers qualifying for relief who live outside the disaster area need to contact the IRS at 866-562-5227. This also includes workers assisting the relief activities who are affiliated with a recognized government or philanthropic organization. Disaster area tax preparers with clients located outside the disaster area can choose to use the bulk requests from practitioners for disaster relief option, described on IRS.gov.

Additional tax relief

Individuals and businesses in a federally declared disaster area who suffered uninsured or unreimbursed disaster-related losses can choose to claim them on either the return for the year the loss occurred (in this instance, the 2024 return normally filed next year), or the return for the prior year (the 2023 return filed this year). Taxpayers have extra time – up to six months after the due date of the taxpayer’s federal income tax return for the disaster year (without regard to any extension of time to file) – to make the election. For individual taxpayers, this means Oct. 15, 2025. Be sure to write the FEMA declaration number – 3605-EM for Florida, 3606-EM for South Carolina, 3607-EM for Georgia and 3608-EM for North Carolina − on any return claiming a loss. See Publication 547, Casualties, Disasters, and Thefts, for details.

Qualified disaster relief payments are generally excluded from gross income. In general, this means that affected taxpayers can exclude from their gross income amounts received from a government agency for reasonable and necessary personal, family, living or funeral expenses, as well as for the repair or rehabilitation of their home, or for the repair or replacement of its contents. See Publication 525, Taxable and Nontaxable Income, for details.

Additional relief may be available to affected taxpayers who participate in a retirement plan or individual retirement arrangement (IRA). For example, a taxpayer may be eligible to take a special disaster distribution that would not be subject to the additional 10% early distribution tax and allows the taxpayer to spread the income over three years. Taxpayers may also be eligible to make a hardship withdrawal. Each plan or IRA has specific rules and guidance for their participants to follow.

The IRS may provide additional disaster relief in the future.

The tax relief is part of a coordinated federal response to the damage caused by these storms and is based on local damage assessments by FEMA. For information on disaster recovery, visit DisasterAssistance.gov.

‍

The new list comes from common issues the IRS compliance teams have seen while analyzing and processing ERC claims. The new items are in addition to seven problem areas the IRS previously highlighted.

The IRS urged businesses with pending claims to carefully review their filings to confirm their eligibility and ensure credits claimed don’t include any of these 12 warning signs or other mistakes. Businesses with these indicators should talk to a trusted tax professional and consider using special ERC Withdrawal Program that remains available. Businesses considering applying for the complex credit also should follow the same steps before submitting a claim.

Businesses with previously approved claims should also review the filings as the IRS intensifies compliance efforts in this area. Businesses should act soon to resolve incorrect claims and avoid future issues such as audits, repayment, penalties and interest.

The IRS issued today’s five new warning signs to give businesses and tax professionals additional time to prepare for an upcoming announcement involving new steps being taken to counter improper ERC claims. In coming days, the IRS plans to issue more information on new compliance work involving high-risk ERC claims as well as details about an anticipated short-term reopening of the Voluntary Disclosure Program and an important update about impending processing of low-risk payments to help small business with legitimate claims. This follows up on last month’s announcement that the IRS was denying more of the highest-risk ERC claims.

“The IRS continues working aggressively to pursue improper claims as well as increase payments going out to businesses with legitimate claims on these complex credits,” said IRS Commissioner Danny Werfel. “As we prepare for the next major announcement, we want businesses to be aware of common errors our compliance teams are seeing, many of which reflect bad advice coming from promoters. The IRS continues to urge people with pending claims or previously approved payments to talk to a trusted tax professional rather than a promoter and see if any of these red flags apply to them.”

Aggressive promoters lured many businesses to mistakenly claim this pandemic-era credit when they’re not eligible. To protect against improper claims, the IRS announced in June that it digitized and analyzed about 1 million ERC claims representing more than $86 billion. To protect taxpayers from getting an improper refund they’d have to repay, the agency will deny tens of thousands of ERC claims that show clear signs of being erroneous.

The agency is also scrutinizing hundreds of thousands more claims that show risk of being incorrect as well as beginning additional processing of low-risk claims to those with eligible claims.

As the IRS begins to process additional lower-risk claims, the agency reminds businesses that they may receive payments for some valid tax periods – generally quarters – while the IRS reviews other periods for eligibility. The IRS emphasizes ERC eligibility can vary from one tax period to another if, for example, government orders were no longer in place or a business’s gross receipts increased. Alternately, qualified wages may vary due to a forgiven PPP loan or because an employer already claimed the maximum amount of qualified wages in an earlier tax period.

Work on ERC compliance efforts around erroneous claims has now topped more than $2 billion since last fall as the agency continues intensifying activity in this area.

The IRS urges taxpayers to work with a trusted tax professional who understands the complex ERC rules. Tax professionals can help businesses recheck their claims and discuss next steps; this is especially important for those who used a promoter to file claims instead of a tax professional.

Five newly announced signs of an incorrect ERC claim

IRS compliance teams have identified these additional five common signs that have been a recurring theme seen on ERC claims. None of these qualify under the rules passed by Congress. The new red flags cover these areas:

• Essential businesses during the pandemic that could fully operate and didn’t have a decline in gross receipts. Promoters convinced many essential businesses to claim the ERC when, in many instances, essential businesses weren’t eligible because their operations weren’t fully or partially suspended by a qualifying government order. Modifications that didn’t affect an employer’s ability to operate, like requiring employees to wash hands or wear masks, doesn’t mean the business operations were suspended. The IRS urges essential businesses to review eligibility rules and examples related to government orders.

• Business unable to support how a government order fully or partially suspended business operations. Whether a business was fully or partially suspended depends on its specific situation. When asked for proof on how the government order suspended more than a nominal portion of their business operations, many businesses haven’t provided enough information to confirm eligibility.

• Business reporting family members’ wages as qualified wages. If business owners claimed the ERC using wages paid to related individuals, those claims are likely for the wrong amount or ineligible. Wages paid to related individuals aren’t qualified wages for the ERC. Generally, related individuals are the majority owner and their:
  • Spouse.
  • Child or a descendant of a child.
  • Brother, sister, stepbrother or stepsister.
  • Father, mother or an ancestor of either.
  • Stepfather or stepmother.
  • Niece or nephew.
  • Aunt or uncle.
  • Son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law or sister-in-law.
  • Household member, meaning an individual who, for the taxable year of the taxpayer, has the same principal place of abode as the taxpayer and is a member of the taxpayer’s household.
    
• Business using wages already used for Paycheck Protection Program loan forgiveness. The U.S. Small Business Administration offered the Paycheck Protection Program, which provided SBA-backed loans that helped businesses keep their workforce employed during the pandemic. The PPP ended May 31, 2021, but borrowers could still apply for PPP loan forgiveness.
  
  If SBA forgave the loan, businesses can’t claim the ERC on wages that they reported as payroll costs to get PPP loan forgiveness. Participating in the PPP affects the amount of qualified wages used to calculate the ERC. Payroll costs up to the amount SBA forgave aren’t eligible for ERC. Taxpayers can use the rest of their qualified wages to figure their credit.
  
• Large employers claiming wages for employees who provided services. Special rules applied to large eligible employers, which are those that averaged:
  • more than 100 full-time employees in 2019 and claimed ERC for 2020 tax periods, and/or
  • more than 500 full-time employees in 2019 and claimed ERC for 2021 tax periods.
    
    Large eligible employers can only claim wages paid to employees who were not providing services. Many large employers’ claims incorrectly included wages for employees who were providing services during these periods. The ERC comparison chart provides more details.

Previously shared signs of an incorrect ERC claim

The IRS also reminded businesses about these other common issues being seen. The agency has continued to issue warnings involving these seven areas:

• Too many quarters being claimed. Some promoters have urged employers to claim the ERC for all quarters that the credit was available. Qualifying for all quarters is uncommon, and this could be a sign of an incorrect claim. Employers should carefully review their eligibility for each quarter.
  
• Government orders that don’t qualify. Some promoters have told employers they can claim the ERC if any government order was in place in their area, even if their operations weren’t affected or if they chose to suspend their business operations voluntarily. This is false. To claim the ERC under government order rules:
  • Government orders must have been in effect and the employer’s operations must have been fully or partially suspended by the government order during the period for which they’re claiming the credit.
  • The government order must be due to the COVID-19 pandemic.
  • The order must be a government order, not guidance, a recommendation or a statement.Some promoters suggest that an employer qualifies based on communications from the Occupational Safety and Health Administration (OSHA). This is generally not true. See the ERC FAQ about OSHA communications and the 2023 legal memo on OSHA communications PDF for details and examples.
  • The frequently asked questions about ERC – Qualifying Government Orders section of IRS.gov has helpful examples. Employers should make sure they have documentation of the government order related to COVID-19 and how and when it suspended their operations. Employers should avoid a promoter that supplies a generic narrative about a government order.
    
• Too many employees and wrong calculations. Employers should be cautious about claiming the ERC for all wages paid to every employee on their payroll. The law changed throughout 2020 and 2021. There are dollar limits and varying credit amounts, and employers need to meet certain rules for wages to be considered qualified wages, depending on the tax period. The IRS urges employers to carefully review all calculations and to avoid overclaiming the credit, which can happen if an employer erroneously uses the same credit amount across multiple tax periods for each employee. For details about credit amounts, see the Employee Retention Credit - 2020 vs 2021 Comparison Chart.
  
• Business citing supply chain issues. Qualifying for ERC based on a supply chain disruption is very uncommon. A supply chain disruption by itself doesn’t qualify an employer for ERC. An employer needs to ensure that their supplier’s government order meets the requirements. Employers should carefully review the rules on supply chain issues and examples in the 2023 legal memo on supply chain disruptions PDF.
  
• Business claiming ERC for too much of a tax period. It's possible, but uncommon, for an employer to qualify for ERC for the entire calendar quarter if their business operations were fully or partially suspended due to a government order during a portion of a calendar quarter. A business in this situation can claim ERC only for wages paid during the suspension period, not the whole quarter. Businesses should check their claim for overstated qualifying wages and should keep payroll records that support their claim.

• Business didn’t pay wages or didn’t exist during eligibility period. Employers can only claim ERC for tax periods when they paid wages to employees. Some taxpayers claimed the ERC but records available to the IRS show they didn’t have any employees. Others have claimed ERC for tax periods before they even had an employer identification number with the IRS, meaning the business didn’t exist during the eligibility period. The IRS has started disallowing these claims, and more work continues in this area as well as other aspects of ERC.

• Promoter says there’s nothing to lose. Businesses should be on high alert with any ERC promoter who urged them to claim ERC because they “have nothing to lose.” Businesses that incorrectly claim the ERC risk repayment requirements, penalties, interest, audit and potential expenses of hiring someone to help resolve the incorrect claim, amend previous returns or represent them in an audit.

Options for resolving incorrect ERC claims

The IRS has several options to help businesses who have discovered they have questionable ERC claims.

• Claim withdrawal: Given the large number of questionable claims identified in the recent review, the IRS continues to urge ineligible businesses with unprocessed claims to consider the ERC Withdrawal Program to avoid future compliance issues. The IRS will treat the claim as though the taxpayer never filed it. No interest or penalties will apply.

• Amending a return: Businesses that overclaimed the ERC can amend their returns to correct the amount of their claim.

• Voluntary Disclosure Program: The IRS is in the final stages of reopening the ERC Voluntary Disclosure Program for a brief period. Additional details are expected to be available shortly.

‍