Employee Retention Credit Voluntary Disclosure Program

On December 21, 2023, the IRS announced a new program for taxpayers who want to pay back money they received filing for the ERC refunds for 2020 and 2021 but feel that they claimed these refunds in error. As part of this program the IRS is allowing taxpayers to only pay back 80% of the refunds and allowing the taxpayers to keep the remaining 20% along with any interest that was paid by the IRS. The IRS will also not charge any interest on the 80% portion that is being paid back. The taxpayer can apply for an installment agreement with the IRS, if it does not have the money to pay back the ERC credit received. The normal interest and fees with an installment agreement will still apply.

Taxpayers that wish to participate in the program will need to file Form 15434 with the IRS by March 22, 2024 to enter the program. To qualify for the ERC Voluntary Disclosure Program, the taxpayer must not be under criminal investigation, nor be under an IRS employment tax examination, nor can they have received an IRS notice and demand for repayment of the ERC. The Taxpayer must also provide the IRS with the names, addresses, and telephone numbers of any advisers or tax preparers who advised or assisted with the original ERC claims.

If the taxpayer has not received their refund yet, the IRS also announced a special withdrawal process for the ERC claims that have been erroneously filed with the IRS. Claims that are withdrawn will be treated as if they were never received by the IRS and will not impose any penalties or interest.

Please consult your tax provider for more details if you believe your entity would be interested in participating in either of these programs.