42.6 F
Schenectady
Thursday, April 18, 2024

Here’s what tax pros recommend after the IRS halts processing for small business tax credit

spot_img
spot_img

“Businesses that receive ERC payments improperly face the daunting prospect of paying those back, so we urge the utmost caution,” IRS Commissioner Danny Werfel said on Thursday, urging small businesses to review claims with a qualified tax professional.

In the meantime, the IRS is working on further guidance on how to withdraw unprocessed ERC claims, along with a settlement program for small businesses who wrongly received the credit and want to pay it back.

‘There’s no need to panic’

While affected small businesses may be concerned, “there’s no need to panic here,” said Jennifer Rohen, a principal at CliftonLarsonAllen with expertise in claiming the ERC.

If you claimed the credit and are worried about eligibility, it’s an excellent time to review your filing with a qualified tax professional, she said.

The IRS has released a detailed ERC eligibility checklist to assist filers. The credit was designed for small businesses and tax-exempt organizations that paid employees during government-mandated shutdowns or experienced a “significant decline in gross receipts” during certain periods in 2020 and 2021.

My blanket advice is always to talk to a qualified tax professional who has filed [ERC claims] before.
Craig Hausz
CEO and managing partner at CMH Advisors

“My blanket advice is always to talk to a qualified tax professional who has filed [ERC claims] before,” said certified financial planner Craig Hausz, CEO and managing partner at CMH Advisors in Dallas. He is also a certified public accountant. 

If you received the credit and know you don’t qualify, Hausz said you should start the process of paying the money back. “I think the IRS is going to be a lot more lenient on abating penalties and interest if someone proactively sends money back,” he added.

There’s still time for a ‘valid claim’

While the deadline for 2020 amended returns is approaching, there’s still time for legitimate ERC claims, said Kristin Esposito, director for tax policy and advocacy for the American Institute of CPAs. Small businesses have until the tax deadline in 2024 to amend 2020 returns.

“If you have a valid claim, I would still go through the calculation and have all your documentation ready,” she said. “But if it seems too good to be true, it usually is.”

New ERC claims won’t be processed until 2024 at the earliest and filers may not receive the credit until the spring or summer, according to Hausz.

spot_img
Marcus Monroe
Marcus Monroe
Marcus Monroe, a recent graduate from the University of Chicago with a degree in Journalism and Economics, is the newest addition to the business reporting team. With internships at major financial publications under his belt, Marcus brings a fresh and analytical approach to business news, focusing on market trends and their impact on the local economy.
Latest news
Read More

LEAVE A REPLY

Please enter your comment!
Please enter your name here