As a part of the ongoing efforts to combat questionable Employee Retention Credit (ERC) claims, the IRS has initiated this week the distribution of over 20,000 letters to taxpayers, notifying them of disallowed ERC claims. The disallowance primarily targets entities that either did not exist or lacked paid employees during the eligible period. IRS Commissioner Danny Werfel emphasizes the need for compliance and warns of forthcoming letters seeking the return of erroneously claimed funds. The agency is also continuing to accept withdrawal requests, through their recently created withdrawal program that provides an opportunity for those with pending inaccurate claims to rectify and avoid penalties.

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