IRS Offers Second Voluntary Disclosure Program for Employee Retention Credit

The IRS announced a second Voluntary Disclosure Program for employers to resolve erroneous claims for credit or refund involving the COVID-19 Employee Retention Credit (ERC). The program is designed to help businesses with questionable claims to self-correct and repay the credits they received after filing erroneous ERC claims, many of which were driven by unscrupulous marketing promoters.

• The first ERC Voluntary Disclosure Program was announced in late December 2023 and ended on March 22, 2024. Over 2,600 taxpayers applied to the first program to resolve their improper ERC claims and avoid civil penalties and unnecessary litigation.
• The second ERC Voluntary Disclosure Program is limited to ERC claims filed for the 2021 tax period. It allows businesses to repay 85% of the credit amount they received, effectively offering a 15% discount on the repayment.

Procedures for the Second Voluntary Disclosure Program

To apply, employers must file Form 15434, Application for Employee Retention Credit Voluntary Disclosure Program, and submit it through the IRS Document Upload Tool. Employers must provide the IRS with the names, addresses, telephone numbers and details about the services provided by any advisors or tax preparers who advised or assisted them with their claims.

Employers are expected to repay their full ERC claimed, minus the 15% reduction allowed through the Voluntary Disclosure Program.

Eligible employers must apply by 11:59 p.m. local time on November 22, 2024.

For more information, see the IRS’s Employee Retention Credit – Voluntary Disclosure Program or contact Yeo & Yeo.