Tax Tips: March 22 deadline approaching to resolve incorrect Employee Retention Credit claims; IRS urges businesses to review questionable claims to avoid future compliance action
WASHINGTON – With a key March 22 deadline rapidly approaching, the Internal Revenue Service renewed calls for businesses to review the Employee Retention Credit (ERC) guidelines to avoid future compliance action for improper claims.
Amid aggressive marketing that misled many businesses into filing claims for ERC, the IRS has sharply increased compliance action through audits and criminal investigations – with more activity planned in the future. To help those who were misled, the IRS has made a limited-time offer available to employers through March 22 to correct improper claims at a sharp discount.
“The window of opportunity is closing for those with questionable claims to fix things before they receive follow-up compliance action,” said IRS Commissioner Danny Werfel. “We strongly urge businesses to review the Employee Retention Credit guidelines immediately before a key disclosure program closes, especially if they encountered a high-pressure push to apply for these credits. Taking action now will avoid potentially hefty penalties and interest if the IRS takes action later. The deals available now are good, and the cost and risk for bad claims will sharply escalate over time.”
Employers who improperly claimed ERC can avoid penalties and interest – and even get a discount on repayments if they apply by March 22, 2024, to the ERC Voluntary Disclosure Program. The IRS also offers a special claim withdrawal process for businesses whose claim is still pending. Taking steps now to resolve these issues can help businesses get right and avoid future IRS actions.
The IRS is urging this review because some ERC promoters shared misleading information or misrepresented eligibility rules and lured businesses to apply for the ERC when they didn’t qualify. Some promoter groups may have called the credit by another name, such as a grant, business stimulus payment, government relief or other names, so even if the terms Employee Retention Credit and Employee Retention Tax Credit don’t sound familiar, businesses should still review their records.
... See MoreSee Less
Tax Tips: Escape penalties and interest with electronic payment options on IRS.gov
WASHINGTON ― With the April 15 filing deadline approaching, the Internal Revenue Service encourages taxpayers who may find it difficult to gather the necessary documents they need to file or pay the taxes they owe to consider several options offered on IRS.gov to avoid late filing and interest penalties.
This is the last in a four-part series called the Tax Time Guide, a resource to help taxpayers file an accurate tax return. As taxpayers approach the April 15 deadline, those who owe taxes can benefit from knowing their options.
Eligible individuals and families who earned $79,000 or less in 2023 can use IRS Free File on IRS.gov, to electronically file their taxes. But all taxpayers, regardless of income, who need more time to file a return can use IRS Free File as an easy and quick way to electronically file for a six-month extension before April 15, 2024. An extension will help to avoid penalties and interest for failing to file on time, and gives taxpayers until Oct. 15, 2024, to file. However, they still must pay what they owe by the April 15 deadline.
Except for eligible victims of recent natural disasters who have until Oct. 15 to make tax payments, taxpayers who can’t pay the full amount of taxes they owe by April 15 should file and pay what they can to reduce total penalties and interest.
There are multiple ways to make electronic payments and there are options for a payment plan or an agreement with the IRS.
... See MoreSee Less
Tax Tips: Seven warning signs of incorrect Employee Retention Credit claims
Some unscrupulous promoters have marketed misleading information about Employee Retention Credit eligibility rules to well-intentioned businesses. The IRS is highlighting seven suspicious signs and urging business to seek a trusted tax professional to resolve an incorrect claim while they still can without penalties or interest.
There’s a deadline of March 22, 2024, for the ERC Voluntary Disclosure Program, which lets businesses who filed a claim in error and received a payment repay just 80% of the claim. Taxpayers who filed an incorrect claim that hasn’t been processed, or who have an ERC check they haven’t cashed or deposited, should quickly pursue the claim withdrawal process.
Seven suspicious signs an ERC claim could be incorrect
• Too many quarters being claimed. Some promoters urged employers to claim the ERC for all quarters that the credit was available. Qualifying for all quarters is uncommon. Employers should carefully review their eligibility for each quarter.
• Government orders that don’t qualify. Some promoters 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. Some promoters also suggested that an employer qualifies based on communications from the Occupational Safety and Health Administration. This is generally not true. Employers should review the frequently asked questions about ERC – Qualifying Government Orders for more information and helpful examples for these topics.
• Too many employees and wrong calculations. Employers should be cautious about claiming the ERC for all wages paid to every employee on their payroll. Employers need to meet certain rules for wages to be considered qualified wages, depending on the tax period. Employers should review all calculations to avoid overclaiming the credit. They should not use the same credit amount across multiple tax periods for each employee. For details on credit amounts, see the ERC 2020 vs 2021 Comparison Chart.
• Business citing supply chain issues. 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.
• 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. Records available to the IRS show some businesses that claimed ERC didn’t have any employees or they claimed ERC for tax periods before the business existed.
• 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, penalties, interest, audit and other expenses.
... See MoreSee Less
你必須登入才能發表留言。