INTERNAL REVENUE SERVICE Commissioner Daniel Werfel speaks throughout an internal revenue service occasion on August 2, 2023 in McLean, Virginia.
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The internal revenue service is sending out more than 20,000 rejection letters to taxpayers who incorrectly declared a pandemic-era tax break as the firm continues its crackdown on “dubious” filings.
Created to support small companies throughout the Covid-19 pandemic, the staff member retention credit, or ERC, deserves countless dollars per qualified staff member. However, the tax break stimulated a wave of business pressing small companies to incorrectly declare the credit– and the firm momentarily stopped processing brand-new filings in September amidst a “surge of questionable claims.”
“With the aggressive marketing we saw with this credit, it’s not surprising that we’re seeing claims that clearly fall outside of the legal requirements,” INTERNAL REVENUE SERVICE Commissioner Danny Werfel stated in a declaration Wednesday.
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Starting today, disqualified taxpayers will begin getting copies of Letter 105 C for prohibited claims. Later this month, the internal revenue service will reveal a “voluntary disclosure program” for taxpayers who incorrectly declared the credit. The firm is declining filings from entities that didn’t exist or didn’t have actually paid workers throughout the eligibility duration.
“The action we are taking today is part of an initial set of steps in our compliance work in this area,” Werfel stated. “More letters will be going out in the near future, including both disallowance letters and letters seeking the return of funds erroneously claimed and received.”
The statement comes less than 2 months because the internal revenue service revealed an unique withdrawal procedure for small companies that incorrectly declared the credit to prevent payment, interest and charges.
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