The Inside Income Service introduced Wednesday that it’s persevering with its crackdown on wrongly claimed worker retention credit (ERCs) by sending out greater than 20,000 disallowance letters to taxpayers and establishing a brand new voluntary disclosure program.
When correctly claimed, the ERC is a refundable tax credit score designed for companies that continued paying staff through the COVID-19 pandemic whereas their enterprise operations had been both absolutely or partially suspended as a consequence of a authorities order or had a big decline in gross receipts through the eligibility intervals.
Based on the IRS, the disallowance letters are being despatched because the IRS continues elevated scrutiny of ERC claims in response to deceptive advertising campaigns which have focused small companies and different organizations.
The IRS says these mailings symbolize the newest transfer in an expanded compliance effort that features a particular withdrawal program for these with pending claims who notice they could have filed an inaccurate tax return. Later this month, a separate voluntary disclosure program will likely be unveiled permitting those that acquired “questionable funds” to “are available and keep away from future IRS motion.”
After an preliminary assessment this fall, the IRS decided that a big block of taxpayers didn’t meet the fundamental standards for the credit score, and beginning this week, taxpayers who’re ineligible for the credit score will start receiving copies of a type referred to as “Letter 105 C, Declare Disallowed.”