To be eligible for the ERC, employers must have: Eligible taxpayers can claim the ERC on an original or amended employment tax return for a period within those dates. The ERC is a refundable tax credit designed for businesses who continued paying employees while shutdown due to the COVID-19 pandemic or had significant declines in gross receipts from Mato December 31, 2021. Improperly claiming the ERC could result in taxpayers being required to repay the credit along with penalties and interest. Taxpayers are always responsible for the information reported on their tax returns. If the business filed an income tax return deducting qualified wages before it filed an employment tax return claiming the credit, the business should file an amended income tax return to correct any overstated wage deduction.īusinesses are encouraged to be cautious of advertised schemes and direct solicitations promising tax savings that are too good to be true. These third parties often charge large upfront fees or a fee that is contingent on the amount of the refund and may not inform taxpayers that wage deductions claimed on the business' federal income tax return must be reduced by the amount of the credit. Some third parties are taking improper positions related to taxpayer eligibility for and computation of the credit. WASHINGTON - The Internal Revenue Service today warned employers to be wary of third parties who are advising them to claim the Employee Retention Credit (ERC) when they may not qualify.
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