Big news for anyone who claimed the ERC credit:

Big news for anyone who claimed the ERC credit:

The IRS is advising over 20,000 taxpayers that their claims for the employee retention credit are being disallowed because entities either did not exist or did not have paid employees during the period of eligibility for the pandemic-era credit.

The IRS will send more disallowance letters and letters seeking the return of money erroneously claimed and received, IRS Commissioner Danny Werfel said.

"With the aggressive marketing we saw with this credit, it's not surprising that we're seeing claims that clearly fall outside of the legal requirements," he said.

The IRS said Wednesday that later this month it will unveil a voluntary disclosure program allowing those who received questionable payments to come in and avoid future IRS action.

"As we continue our audit and criminal investigation work involving the employee retention credits, we continue to urge people who submitted a claim to review the rules with a trusted tax professional," Werfel said. "If they filed an inaccurate claim, we urge them to consider withdrawing their pending claim or use the upcoming disclosure program to repay improper refunds to avoid future action."

The ERC was designed for certain businesses to continue paying employees during the COVID-19 pandemic while their operations were either fully or partially suspended due to a government order or had a significant decline in gross receipts during the eligibility periods. It was generally available to eligible businesses from March 31, 2020, to Sept. 30, 2021, and to Dec. 31, 2021, for recovery startup businesses.