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New IRS ERC Voluntary Disclosure Program: What You Need To Know

The IRS has recently launched a second Employee Retention Credit Voluntary Disclosure Program (ERC-VDP) for businesses and organizations that claimed the Employee Retention Credit (ERC) for 2021 tax periods but are now ineligible and need to repay the credit. This program is a critical opportunity for those who may have mistakenly claimed the ERC to rectify their situation with reduced penalties and interest. Here’s everything you need to know about this new program, which is open through November 22, 2024.

Key Benefits of the Second ERC Voluntary Disclosure Program

Participating in the second ERC-VDP offers several significant advantages for businesses and organizations looking to resolve ineligible ERC claims:

  • Partial Repayment: You only need to repay 85% of the ERC amount received, allowing you to retain a portion of the credit.
  • No Interest Repayment: There’s no need to repay any interest you received on the ERC refund, which can result in substantial savings.
  • No Need to Amend Tax Returns: Participants do not need to amend income tax returns to reduce wage expenses, simplifying the process.
  • Non-Taxable Reduction: The 15% reduction is not considered taxable income, providing additional financial relief.
  • No Penalties or Interest: If the ERC repayment is made in full when you return your signed closing agreement, the IRS will not charge penalties or interest.
  • Audit Protection: The IRS will not audit the ERC on your employment tax return for tax periods resolved within the terms of the second ERC-VDP.

Eligibility Criteria

The second ERC-VDP is open to various entities, including businesses, tax-exempt organizations, and government entities. To qualify, you must have already received the ERC for 2021, and now believe you were not entitled to it. Additionally, you cannot be under a current IRS audit or criminal investigation.

How to Participate

If you determine that this program is the right solution for your situation, you’ll need to complete the application process:

  • Prepare and Submit the Necessary Forms: The application requires Form 15434, along with the ERC-VDP Form SS-10. These forms must be signed by an authorized representative of your business.
  • Submit Your Application: Use the IRS’s online Document Upload Tool to submit your application by the November 22, 2024 deadline.
  • Consider Payment Options: If you’re unable to repay the full amount upfront, the IRS allows you to apply for an installment agreement as part of your application.

Once your application is reviewed and accepted by the IRS, you’ll receive a closing agreement in the mail outlining the terms of your repayment. If the IRS declines your application, they will provide guidance on the next steps.

Get Professional Assistance with Dallo Law Group

Correcting an ERC claim can be a complex and stressful process, but you don’t have to navigate it alone. At Dallo Law Group, we have the expertise to guide you through every step of the ERC-VDP, ensuring that your application is accurate and compliant with IRS regulations. Our experienced tax attorneys are here to help you achieve the best possible outcome.

If you’re considering the ERC Voluntary Disclosure Program or have questions about your eligibility, contact Dallo Law Group today. We’re here to provide the support and advice you need to resolve your tax matters with confidence.

Contact: 619-912-0616

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