Volume 23.05
Many healthcare providers, for-profit and tax-exempt, submitted claims to secure the Employee Retention Credit based on lost revenues; however, many submitted claims based on other criteria related to the issuance of government orders. These claims, especially those submitted based on criteria other than qualifying revenue losses, are being subjected to increased scrutiny by the Internal Revenue Service.
As part of a larger effort to protect small businesses and organizations from scams, the Internal Revenue Service has announced the details of a special withdrawal process to help those who filed an Employee Retention Credit (ERC) claim and are concerned about the accuracy of the claim.
This new withdrawal option allows certain employers that filed an ERC claim but have not yet received a refund to withdraw their submission and avoid future repayment, interest, and penalties. Employers that submitted an ERC claim that’s still being processed can withdraw their claim and avoid the possibility of getting a refund for which they’re ineligible.
The IRS created the withdrawal option to help small business owners and others who were pressured or misled by ERC marketers or promoters into filing ineligible claims. Claims that are withdrawn will be treated as if they were never filed. The IRS will not impose penalties or interest.
Those who willfully filed a fraudulent claim, or those who assisted or conspired in such conduct, should be aware that withdrawing a fraudulent claim will not exempt them from potential criminal investigation and prosecution.
In July, the IRS said it was shifting its focus to review ERC claims for compliance concerns, including intensifying audit work and criminal investigations on promoters and businesses filing dubious claims. The IRS has hundreds of criminal cases being worked on, and thousands of ERC claims have been referred for audit.
The new withdrawal process follows the Sept. 14 announcement of an immediate moratorium on processing new ERC claims. The moratorium, which will last until at least the end of this year, follows a flood of ineligible ERC claims.
To take advantage of the claim withdrawal procedure, taxpayers should carefully follow the special instructions available here and summarized below.
- Taxpayers whose professional payroll company filed their ERC claim should consult with the payroll company. The payroll company may need to submit the withdrawal request for the taxpayer, depending on whether the taxpayer’s ERC claim was filed individually or batched with others.
- Taxpayers who filed their ERC claims themselves, haven’t received, cashed, or deposited a refund check and have not been notified their claim is under audit should fax withdrawal requests to the IRS using a computer or mobile device. The IRS has set up a special fax line to receive withdrawal requests. This enables the agency to stop processing before the refund is approved. Taxpayers who are unable to fax their withdrawal using a computer or mobile device can mail their request, but this will take longer for the IRS to receive.
- Employers who have been notified they are under audit can send the withdrawal request to the assigned examiner or respond to the audit notice if no examiner has been assigned.
Those who received a refund check, but haven’t cashed or deposited it, can still withdraw their claim. They should mail the voided check with their withdrawal request using the instructions here.
NEWLY PROPOSED ENROLLMENT CATEGORY (STAY OF ENROLLMENT)
The Proposed Rule regarding physician payments dated August 7, 2023, provides many Medicare enrollment changes including a new category of payment deactivation, “Stay of Enrollment”.
The Stay of Enrollment (discretionary) relates to a deactivation of billing privileges and is intended to create a middle ground between a deactivation of billing privileges and no action by CMS. The requirements are:
- Provider must be non-compliant with at least one enrollment requirement and
- CMS determines that the provider can remedy the non-compliance via the submission of a Form 855 or Form 588 (change of information or revalidation submission).
During the stay period, the provider would not receive payment for services rendered even after the stay concludes. All providers should become familiar with all of the enrollment provisions included in the proposed rule.