IRS’s New Tax Amnesty Program: Voluntary Disclosure Program for questionable Employee Retention Credits
On December 21, 2023, the Internal Revenue Service announced a new Voluntary Disclosure Program (the “ERC VPD”) to assist taxpayers who want to pay back the IRS after having erroneously filed for Employee Retention Credits (the “ERC”).
The IRS is also urging employers to withdraw pending ERC claims in a separate program that allows them to remove a pending claim with no interest or penalty. Over $100 million in withdraws have been made by taxpayers as the IRS continues aggressively pursuing audits and criminal investigations.
Taxpayers must apply for the ERC VDP by March 22, 2024 and those who are accepted must pay back only 80% of the ERC the taxpayer received. Taxpayers who cannot repay the amount owed may be enter into an installment agreement. The IRS agreed to accept only 80% because many ERC promoters charged a percentage of the ERC paid to the taxpayers and so the taxpayer never actually received the total amount of the ERC.
To qualify for the ERC VDP, applicants must report the name, address, and telephone numbers of the advisors or tax preparers who advised or assisted in the preparation of the claims.
Any employer who received an ERC but was not entitled to one can apply to the ERC VPD if all of 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 ERC examination for the tax period for which they are applying for the ERC VDP.
The employer has not received an IRS notice and demand for repayment.
The IRS has not received information from a third party that the employer is not in compliance or has not acquired information directly related to the noncompliance from an enforcement action.
If you are interested in applying for the ERC VDP, please contact Christine Concepción at caconcepcion@concepcionlaw.com