In a recent development, the IRS has rolled out the Employee Retention Credit (ERC) Voluntary Disclosure Program, offering eligible taxpayers a chance to correct their ERC claims while preserving a substantial portion of the credit. This program, detailed in IRS Announcement 2024-3, is designed to encourage voluntary disclosure and compliance.

What is the ERC Voluntary Disclosure Program?

Under this program, taxpayers can repay only 80% of the gross amount of ERC erroneously claimed while retaining the remaining 20%. It's a significant opportunity for businesses and organizations that may have mistakenly claimed ERC credits in the past.

Eligibility Criteria

To participate in the ERC Voluntary Disclosure Program, you must meet the following four requirements:

1. No Criminal Investigation: You cannot be under criminal investigation, and the IRS should not have notified you of its intent to commence a criminal investigation related to your ERC claims.

2. No Third-Party Alerts: The IRS should not have received information from a third party alerting them to your noncompliance. Furthermore, the IRS should not have obtained information directly related to your noncompliance through an enforcement action.

3. No Ongoing Employment Tax Examination: You should not be under an IRS employment tax examination for any tax period for which you are applying for ERC through this program.

4. No Previous Notice and Demand for Repayment: You should not have previously received a notice and demand for the repayment of all or part of the claimed ERC.

Application Process

Eligible taxpayers interested in participating in the ERC Voluntary Disclosure Program must act promptly. The deadline for filing Form 15434, "Application for Employee Retention Credit Voluntary Disclosure Program," is March 22, 2024, at 11:59 pm local time. You can submit this form to the IRS using the Document Upload Tool at www.irs.gov/help/irs-document-upload-tool.

Third-Party Claims

If your ERC claims were filed by third-party payers, such as agents or professional employer organizations, it's important to note that you must apply for the Voluntary Disclosure Program through the third-party payer. Ensure effective communication and collaboration with your third-party representative to take advantage of this opportunity.

In conclusion, the IRS's Employee Retention Credit Voluntary Disclosure Program offers eligible taxpayers a unique chance to rectify past ERC claim errors while saving 20% of the credit amount. If you meet the eligibility criteria and have erroneously claimed ERC, consider taking advantage of this program to ensure compliance and minimize potential tax penalties. For personalized guidance and assistance with the application process, don't hesitate to reach out to our CPA firm. We're here to help you navigate this opportunity effectively.