IRS Reopens Employee Retention Credit Voluntary Disclosure Program

By: Taylor Bickley

In recent months, significant developments have occurred regarding the Employee Retention Credit (ERC) program. These include the expiration of the moratorium, the IRS’s issuing of 28,000 disallowance letters, and the reopening of the Voluntary Disclosure Program (ERC-VPD).

In December 2023, the IRS announced the launch of the Voluntary Disclosure Program (ERC-VPD), which ended in March 2024. This initiative aimed to help businesses correct tax liabilities, reduce the risk of litigation, and avoid penalties and interest resulting from incorrect claims of the Employee Retention Credit (ERC). In the initial phase, over 2,600 applications were submitted by ERC recipients, totaling $1.09 billion in credits.

As of August 15, 2024, the IRS has announced the reopening of the disclosure program. It will be available until November 22, 2024, for 2021 tax period filings. Please be aware that the 2020 tax periods are no longer available for this program.

Program Details and Terms:

This program will allow businesses to pay back 85% (15% discount) of the ERC claimed to the Department of Treasury (including refundable and refundable portions). After the IRS receives and approves the documentation, they will prepare a closing agreement that needs to be signed within 10 days. The IRS does not require the business to repay interest received on the refunds.

Interest and penalties may apply if the business cannot make the full 85% payment, and the IRS approves an agreed-upon installment agreement.

Who is eligible? 

• A business that has already received a refund (2021 tax periods only) that has been cashed, deposited, or the credit has been applied to a future tax period.
• The business was entitled to $0 ERC.
• The business has yet to receive an IRS notice requesting repayment or reversal for part or all the claims.
• The business is not under criminal investigation or IRS examination.
• The business is not under the IRS employment tax examination for any tax period for the credit claimed.
• The business did not previously amend its employment tax return to eliminate the ERC Claim (before December 21, 2023).

How to participate?

To participate in the program, the business must submit Form 15434 (Application for Employee Retention Credit (ERC) Voluntary Disclosure Program) on or before November 22, 2024. After submitting the application, the business must cooperate and comply with any additional information requests from the IRS. In the updated announcement, the business must provide the following information:

• Taxpayer information and if the taxpayer will be represented by a practitioner (Form 2848 will be required).
• Identify the tax period(s) claimed for ERC, which form was used, and the amount claimed.
• The business needs to provide a signed ERC Voluntary Disclosure Program Form SS-10 (Consent to Extended the Time to Assess Employment Taxes)

Note: A participant who claimed ERC using a third party cannot apply themselves. They will need to contact the third-party payer to submit the application.

For businesses that are still awaiting their ERC refunds, we recommend being patient during this time. Due to the moratorium and increased scrutiny around ERC, the delay in issuing refunds has been extended. Please be aware that before the moratorium was put into effect, the IRS had over 560,000 unprocessed 941Xs. As of December 9, 2023, the IRS had over 1,057,000 unprocessed 941Xs. Businesses are still able to withdraw ERC claims that have not been processed (ERC Withdrawal Program).

If you have any questions about ERC, please get in touch with Taylor Bickley who can assist you further.

The IRS has released the following information and updated guidance here: 

IRS Release

Frequently Asked Questions

IRS Article

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