IRS Announces Voluntary Disclosure Program for Ineligible Employers Who Claimed Employee Retention Credit

In its continued effort to combat erroneous Employee Retention Credit (ERC) claims, the IRS announced a new Voluntary Disclosure Program (VDP) for employers who claimed and received the ERC, but may not be eligible. The program is open through March 22, 2024, so taxpayers that received ERC should analyze their eligibility to determine if they need to apply.

Highlights of the ERC Voluntary Disclosure Program include:

If you claimed an ERC on an employment tax return that has been processed and paid as a refund that you have cashed or deposited, or paid in the form of a credit applied to the tax period or another tax period, you may be eligible to apply for the program if you meet all the following requirements:

The IRS application process includes a form that must be electronically filed. Applicants will receive a letter from the IRS confirming whether the application was accepted or rejected. If accepted, the IRS will mail a closing agreement documenting the terms of the program. The agreement as returned to the IRS must be signed by an authorized person and include the repayment of the 80 percent ERC claim or installment agreement. You must make the repayment using the IRS Electronic Federal Tax Payment System and make a separate payment for each period claimed.

If you have questions or need assistance, please contact your HBK representative.