The IRS issued Announcement 2024-3 on December 21, 2023 to roll out the Voluntary Disclosure Program. The program is a process to pay back the ERC credit for recipients who believe they received it in error.
The program will run through March 22, 2024, and only requires 80% of the claim be repaid to help combat fees likely paid to bad actors who encouraged the filing of ERC. Employers will not need to pay back the interest paid by the IRS on ERC claims. If an employer is unable to pay back the full 80% at this time they can set up an installment agreement with the IRS. Those that use the installment agreement would be subject to normal fees and interest associated with installment plans.
Any employer who received ERC but believes they are not entitled to it can apply if the following are true:
- The employer is not under criminal investigation and has not been notified that they are under criminal investigation.
- The employer is not under an IRS employment tax examination for the tax period for which they’re applying to the Voluntary Disclosure Program.
- The employer has not received an IRS notice and demand for repayment of part or all the ERC.
- The IRS has not received information from a third party that the taxpayer is not in compliance or has not acquired information directly related to the noncompliance from an enforcement action.
To apply to the program, the employer will need to file Form 15434 and submit it through the IRS Document Upload Tool. If an employer outsources their payroll for reporting, collecting, and paying employment taxes and used the third party’s employer identification the third party will need to file Form 15434.
The IRS does also stress that if you have a pending ERC credit that has yet to be processed, but no longer believe you should receive the credit there is a process in place to pull back the filing without any interest or penalties.
Here is how Smith Schafer can help:
- If you used another party to file the credit, Smith Schafer can review your eligibility and advise you if we believe you should apply for the Disclosure Program.
- Smith Schafer can give guidance on how to withdraw pending ERC filings and how to apply for the Disclosure Program.