The Internal Revenue Service (IRS) has announced a series of steps in response to fraudulent Employee Retention Credit (ERC) claims, sending over 20,000 disallowance letters to taxpayers who filed non-compliant requests. This move is part of a broader strategy to counter dubious claims, often stemming from misleading marketing campaigns targeting small businesses and other organizations.The program includes the issuance of disallowance letters, the option to withdraw pending claims, and a voluntary disclosure program. This initiative aims to prevent improper payments to ineligible entities and forestall future actions by the IRS.In Brief:The IRS is focused on scrutinizing ERC claims to ensure compliance with regulations. Disallowance letters are set to be dispatched to over 20,000 taxpayers, emphasizing the need to review claims against legal requirements.What's Happening?The IRS has found that a significant portion of taxpayers does not meet the basic criteria for claiming the credit. Disallowance letters will be sent to entities that either did not exist or had no employees during the eligibility period for the ERC. IRS Commissioner Danny Werfel stated that this initial action is part of a broader compliance effort.How to Respond?If you receive Disallowance Letter 105 C, you have the opportunity to provide documentation supporting your eligibility or the claimed amount. Alternatively, you can initiate an administrative appeal.Key MessageThe credit is intended for businesses that continued to pay employees during the COVID-19 pandemic and experienced either total or partial suspensions of operations or a significant decline in gross receipts.Recommended ActionsReview Your Claim: Ensure your claim adheres to eligibility requirements.Consultation with a Professional: Consult a trusted tax professional to clarify any doubts.Withdrawal Program: If you realize you've filed inaccurate claims, consider withdrawing them to avoid future IRS actions.Technical Glossary:ERC - Employee Retention Credit: Refundable tax credit designed for businesses that continued to pay employees during the COVID-19 pandemic.IRS - Internal Revenue Service: United States government agency responsible for tax collection and enforcement.ID: Identification.#IRSCompliance #ERCAlert #TaxCreditUpdate #SmallBusinesses #TaxComplianceTipsIt's crucial for taxpayers to carefully review the rules and, if necessary, consider withdrawing pending claims. The IRS is working to ensure that compliant claims are processed correctly, thereby reducing the risks of audits, improper refunds, and penalties.For more information on ERC eligibility, refer to the ERC frequently asked questions and the Eligibility Checklist, available as an interactive tool or printable guide.Sources: Internal Revenue Service (IRS), Department of the Treasury.