Tim’s Tax News on the Tenth – January 2024

Timothy M. Hughes • January 10, 2024

IRS Announces Novel New Voluntary Disclosure Program – Lets Employers Who Received Questionable Employee Retention Credits Pay Them Back at Discounted Rate

A magnifying glass with the word taxes written on it


The IRS announced as part of its ongoing initiative aimed at combating dubious Employee Retention Credit (ERC) claims, the IRS launched a new Voluntary Disclosure Program to help businesses who want to pay back the money they received after filing ERC claims in error. The new disclosure program is meant to help “innocent taxpayers” who were misled by aggressive marketing ERC companies that caused some unqualified employers into filing claims. The special disclosure program runs through March 22, 2024, and the IRS added provisions allowing repayment of 80% of the claim received.


The IRS also continues to urge employers with pending ERC claims to consider a separate withdrawal program that allows them to remove a pending ERC claim with no interest or penalty. The IRS has already received more than $100 million in withdrawals as it continues intensifying audits and criminal investigation work in the ERC area.


As the IRS continues special initiatives addressed towards ERC, the IRS plans on providing an update in early 2024 on the status of the moratorium. Additionally, the IRS mailed out 20,000 denial letters to ERC claimants in early December 2023. The novel ERC Voluntary Disclosure Program (closing March 22, 2024) with its 80% repayment for those that the IRS accepts into the program also waives repayment of interest that may have been paid to the taxpayer. The 20% discount was conceived to help taxpayers repay the credit they received after paying promoter fees. If the taxpayer is unable to repay the required 80% of the credit, the IRS may allow for an installment agreement on a case-by-case basis, pending submission and review of a Collection Information Statement for Businesses form and all required supporting documentation.


The IRS will not charge program participants interest or penalties on any credits they repay. However, if the employer is unable to repay the required 80% of the credit at the time of signing their closing agreement, then the employer will be required to pay penalties and interest in connection with entering into an installment agreement.


If you would like more details, please do not hesitate to call our office. Our office has been successful in helping taxpayers with IRS and IDOR collection problems for over 30 years. If you have a tax or debt problem, please contact me at 847-705-9698 or thughes@lavellelaw.com and find out how we can help you.


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