The IRS has been taking several measures to combat frivolous and fraudulent Employee Retention Credit Claims. As part of these measures, the IRS has now released a Voluntary Disclosure Program to help businesses who want to pay back money they received in error.
This Voluntary Disclosure program is set to run through March 22, 2024, and allows for repayment of only 80% of the claim received on those that the IRS accepts into the program. If the IRS paid interest on the ERC claim, the interest would not need to be repaid. Penalties and interest will not be charged on credits Taxpayers repay. Taxpayers who can’t pay back the 80% at one time may be eligible for an Installment Agreement on a case-by-case basis. In this case, penalties and interest will be charged in connection with the Installment Agreement.
The 80% figure was created because most companies who solicited ERC business charged a percentage fee, so recipients of the ERC never received the full amount.
To qualify, the Taxpayer must provide the IRS with the names, addresses and telephone numbers of any advisors or tax preparers who advised or assisted them with their claim and details about the services provided. The Taxpayer must also not be under criminal investigation, not be under an IRS employment tax examination for the tax period at issue, the Taxpayer must not have received an IRS notice and demand for payment for all or part of the ERC, and the IRS must not have received information from a 3rd party that the Taxpayer is not in compliance.
To apply, the Taxpayer must file an IRS Form 15434: Application for Employee Retention Credit Voluntary Disclosure Program.
“The disclosure program provides a much-needed option for employers who were pulled into these claims and now realize they shouldn’t have applied,” said IRS Commissioner Danny Werfel. “From discussions we have had with taxpayers and tax professionals around the country, we understand that there are many employers eager to correct their error, but who remain concerned about their ability to pay back the portion of the credit that has been lost to the promoter that brought them into this mess. This new option, with an opportunity to get right with a lower financial cost, provides the relief these taxpayers requested. The new initiative will also help with our ongoing efforts to gather information on promoters who created this situation by aggressively pushing people to apply for the credit.”
Are you a business owner who received ERC refunds you aren’t sure you should have received? Interested in exploring your eligibility in the IRS’ Voluntary Disclosure Program? Bryson Law Firm, LLC can help. Contact our office today for a free, initial consultation to discuss further.