IRS Announces New ERC Voluntary Disclosure Program

ERC voluntary disclosure program deadline March 2024

Following their September announcement of an Employee Retention Tax Credit (ERC) Claims Withdrawal Program, on December 21, the IRS released details regarding a voluntary disclosure program. This program intends to help taxpayers who received an ERC check and no longer believe their claim qualifies for the program. You can read the agency’s full announcement on their website.

The new ERC Voluntary Disclosure Program allows eligible taxpayers (generally, those that are not already under audit or criminal investigation) to come forward voluntarily by March 22, 2024, and pay back 80% of the credit amounts they received. Those who participate in the program will be allowed to keep the remaining 20% of credits they have already received, plus any interest they received on the payments. Additionally, they will not have to pay any interest back on the credits or be subject to civil penalties.

Combined with the ERC moratorium and the Withdrawal program, this new ERC Voluntary Disclosure program intends to help protect business owners from widespread misinformation regarding ERC eligibility.

If you’re unsure about your filed ERC claim and have been waiting to get a second opinion, the time to act is NOW.

Our team of expert tax attorneys can analyze your ERC claim, determine your risk of getting caught up in the incoming wave of audits, assess your resolution options, and guide you through the ERC Voluntary Disclosure process.

In the meantime, let’s break down what we know so far about the disclosure program.

What should I do if I filed an ERC Claim and received credits I’m not sure I’m entitled to?

If you filed an ERC claim and already received a check for the credits but are unsure if you were even qualified to begin with, it’s vital to reach out to a tax attorney who can help provide an expert opinion. You should especially contact an attorney or consider applying for the ERC Voluntary Disclosure program if you worked with an unscrupulous third-party ERC promoter who may have led you into filing for ERC, even if you may not have been qualified.

Who can apply for the ERC Voluntary Disclosure Program?

If you filed an ERC claim and received a refund check from the IRS, you may be able to take advantage of this program if you meet the following conditions laid out by the IRS in their announcement.

  • The employer is not under criminal investigation and has not been notified that they are under criminal investigation.
  • The employer is not under an IRS employment tax examination for the tax period for which they’re applying to the Voluntary Disclosure Program.
  • The employer has not received an IRS notice and demand for repayment of part or all of the ERC.
  • The IRS has not received information from a third party that the taxpayer is not in compliance or has not acquired information directly related to the noncompliance from an enforcement action.

Is there a deadline to apply for the ERC Voluntary Disclosure Program?

The deadline to apply for the ERC Voluntary Disclosure Program with the IRS is March 22, 2024. If accepted into the program, you will only be required to pay back 80% of the credit amounts you received.

While March may seem like a long time from now, preparing your disclosure and dealing with the IRS can take longer than expected. If you are considering applying to the ERC Voluntary Disclosure Program, it may be wise to get connected with a tax attorney right away who can help guide you through the process and work with the IRS on your behalf to avoid missing the deadline.

Why do I only have to repay 80% of the ERC refund?

The IRS came to this 80% requirement knowing that a vast amount of employers taken advantage of by ERC mills were required to pay contingency fees for their claims. Since it’s unlikely that taxpayers who were bilked by third-party promoters will ever be able to claw back those funds, the IRS is providing a generous resolution option to help alleviate the financial burden for innocent taxpayers who were taken advantage of.

If your disclosure is accepted and you can’t afford to pay the entire lump sum right then and there, the IRS has stated that employers will have options to set up an installment agreement.

What if I decide not to apply for the ERC Voluntary Disclosure Program, and my ERC claim gets audited later?

If you have any doubts surrounding your ERC claim and you decide to not take the opportunity to disclose your claim to the IRS, it’s possible your claim may later get audited, forcing you to pay back the full refund amount, plus penalties and interest.

IRS Commissioner Danny Werfel warned that the agency will continue to pursue compliance activities surrounding the ERC program and hopes “taxpayers take advantage of this window now,” citing that an audit later on will include “steeper costs and greater risk.”

The IRS has provided a FAQ on their website regarding the ERC Voluntary Disclosure program that highlights the hefty penalties and interest you could face if your claim is found to be ineligible and you failed to come forward through the program. On top of the financial consequences, there is a potential risk of criminal investigation and prosecution by the IRS for unqualified ERC claims.

How do you apply for the ERC Voluntary Disclosure Program?

Employers interested in applying for the ERC Voluntary Disclosure Program should start by filling out Form 15434, Application for Employee Retention Credit (ERC) Voluntary Disclosure Program. After filling out the form, follow the instructions on Form 15434 to submit your disclosure using the IRS Document Upload Tool. Once submitted, you will have to wait to receive notice that the IRS has approved your application before moving forward with payment.

How should I decide if I should apply for the ERC Voluntary Disclosure Program?

The IRS is well aware of the ERC scams and misinformation that ran rampant after the introduction of the credit. They are also mindful of the complex nature of the credit that left many employers unsure if they were truly qualified for the credit. Because of this, the IRS is offering the ERC Voluntary Disclosure Program as a way out for taxpayers who want to avoid future problems with their ERC claim.

It’s not too late to get a second opinion on your ERC claim. If you have any doubt that you may not be fully eligible for the credits you filed for and are qualified to disclose your claim under the IRS’ new program, you should consult a professional as soon as possible.

At Wiggam Law, we’ve been keeping up with the twists and turns of ERC since day one. Our experienced tax attorneys can help you evaluate your claim and guide you through the ERC Voluntary Disclosure Program if necessary.

Call us at (404) 233-9800 or fill out our online form to schedule a consultation today! Reaching out for help now can help save you a potential headache later as the IRS continues to crack down on ERC claims.