Countdown to ERC Compliance: Voluntary Disclosure Program Deadline March 22

Reprint – IRS Tax Tip 2024-09, Feb. 20, 2024

The IRS urges businesses to review their eligibility for the Employee Retention Credit because there’s limited time for them to voluntarily resolve incorrect claims and avoid future issues, such as penalties and interest.

Some honest businesses were misled into filing claims for the Employee Retention Credit by promoters who often misrepresented or oversimplified eligibility rules. Businesses that received the credit but don’t meet the ERC rules should consider applying for the ERC Voluntary Disclosure Program before the March 22 deadline. The IRS also offers a withdrawal program for those whose claims haven’t yet been paid.

The ERC, sometimes called ERTC, is a refundable tax credit for certain eligible businesses and tax-exempt organizations that had employees and were affected during the COVID-19 pandemic. The requirements vary depending on the time of claim, and it is not available to individuals.

ERC Voluntary Disclosure Program open until March 22, 2024

Businesses that filed a claim in error and received a payment may be able to apply to the IRS Voluntary Disclosure Program. The special program runs through March 22, 2024, and lets taxpayers repay just 80% of the claim received.

From Tax School: More about the Voluntary Disclosure Program

For more about the Voluntary Disclosure Program, including what prompted its creation, how it works, and who is eligible to apply, see our January 15, 2024 blog post entitled IRS Introduces Voluntary Disclosure Program for Ineligible ERC Claims.

The IRS also recently posted seven warning signs of incorrect ERC claims.