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Federal Tax

IRS: Warning Signs of Incorrect ERC Claims; Resolve Issue Now

Checkpoint Federal Tax Update Staff  

· 1 minute read

Checkpoint Federal Tax Update Staff  

· 1 minute read

The IRS shared warning signs that an Employee Retention Credit (ERC) claim may have issues. Small businesses are urged to resolve incorrect claims by March 22, 2024. (IR 2024-39, 2/13/2024)

The IRS alerted businesses about seven warning signs involving ERC claims. The alert comes as a March 22, 2024, deadline approaches. The ERC, sometimes called the Employee Retention Tax Credit (ERTC), is complex and the IRS urged claimants to seek a reputable tax professional for help with a claim.

Seven suspicious signs an ERC claim could be incorrect:

  • Too many quarters being claimed
  • Government orders that don’t qualify
  • Too many employees and wrong calculations
  • Business citing supply chain issues
  • Business claiming ERC for too much of a tax period
  • Business did not pay wages or did not exist during eligibility period
  • Promoter says there is nothing to lose

Resolving incorrect ERC claims

A business that received, but was not eligible for, the ERC, can participate in the Voluntary Disclosure Program. The program ends March 22, 2024. It allows eligible participants to repay the incorrect ERC, minus 20%.

The ERC is available to eligible employers that paid wages to employees after March 12, 2020, and before January 1, 2022. The ERC is not available to individuals.

For more information regarding the ERC, see Checkpoint’s Federal Tax Coordinator ¶T-10164.11.


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