On December 21, 2023, the IRS announced the launch of a new voluntary disclosure program for employers that received an Employee Retention Credit (ERC) but were not actually entitled to the ERC. The ERC is a refundable tax credit for certain employers that had employees that were affected during the COVID-19 pandemic.
To participate the employer must file Form 15434, Application for Employee Retention Credit Voluntary Disclosure Program, by March 22, 2024, and meet the following criteria:
- The employer is not under criminal investigation and has not been notified that the IRS intends to commence a criminal investigation;
- The IRS has not been alerted about the employer’s noncompliance;
- The employer is not under IRS employment tax examination for the tax periods for which the employer is applying for relief; and
- The employer has not previously received an IRS notice and demand for repayment of all or part of the ERC.
If the employer outsourced its payroll to a third-party payer and filed the employment tax return under the third-party payer’s EIN rather than using its own EIN, then the third-party payer must apply on the employer’s behalf.
In addition, the employer must provide the IRS with the names, addresses and telephone numbers of any advisors or tax preparers who assisted with the ERC filing.
Terms of the Program
If the employer is accepted into the program, it will need to repay 80% of the ERC received, including both the refundable and nonrefundable portions. No interest or penalties will be charged on any ERCs that are repaid. Employers that cannot repay the 80% may be considered for an installment agreement subject to penalties and interest in connection with entering into the installment agreement.
Given the approaching deadline and eligibility requirements, employers should act quickly if they want to participate in this program.
If you have any questions about the program or eligibility, please contact a member of our Tax practice group.