The IRS has introduced a new policy allowing penalty-free withdrawals of Employee Retention Credit (ERC) claims, specifically targeting incorrect or fraudulent claims. Small business owners and others can now withdraw ERC claims and avoid repayment of refunds, interest, and penalties for erroneous claims. This includes cases under audit, where taxpayers can request withdrawal without facing penalties, a departure from the typical restrictions on amending or withdrawing claims under audit. Eligible claims for withdrawal are those made on an adjusted employment return filed exclusively for the ERC, and the IRS must not have paid the refund or the taxpayer must not have cashed or deposited the refund check. The policy is designed to assist taxpayers who were pressured or misled into filing ineligible ERC claims by marketers and promoters. However, the IRS retains the right to pursue criminal charges if it determines that a taxpayer knowingly submitted a false claim, even after the claim is withdrawn.