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How to Withdraw Your Employee Retention Credit Claim

Audio version available here:

Length: approx. 1 min.

After enacting a moratorium on the pandemic-era Employee Retention Tax Credit due to a large number of false claims and scam promoters, the IRS recommended that businesses who recently submitted claim applications withdraw them. This is because new claims will not be processed. For more information on the moratorium itself, read our original blog post.

Receiving a refund you are not entitled to can result in repayment, interest, and penalties. To avoid this, you can follow the IRS’s guide to withdraw your claim; however, there are very specific qualifications you must meet:

  1. Your ERC claim was made on an adjusted employment return, which would include Forms 941-X, 943-X, 944-X, and CT-1X.

  2. No adjustments were made to the return other than the ERC claim.

  3. You wish to withdraw the entire amount of your ERC claim.

  4. You have received no money from the IRS, or if you have, it is not yet deposited or cashed in.

If you do not meet all of these qualifications, you can withdraw your claim by filing an amended return. If you do meet the qualifications, you will then need to determine which of these three questions your position best applies to and follow the appropriate steps:

  1. Have you not received a refund or audit notice?

  2. Have you not received a refund but have received an audit notice?

  3. Have you received a refund check but have not deposited or cashed it?

For instructions on how to begin the withdrawal process based on which of these questions you answered "yes" to, click here.

Additionally, consulting a tax professional to guide you along this process can help your chances at avoiding repayment and penalties to the IRS. If you have received ERC money but feel that you may not meet eligibility requirements, our team at XQ CPA can help you rectify the situation to avoid any further penalties. Reach out by calling us, or make an appointment at the link below.

Phone: 832-295-3353

IRS example of an amended Form 941-X with ERC withdrawal process drawn on the form.


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