IRS Allows Businesses to Withdraw ERC Claims

The Internal Revenue Service (IRS) has announced the re-launch of its Voluntary Disclosure Program (VDP) aimed at businesses wishing to withdraw their Employee Retention Credit (ERC) claims. This comes in response to widespread frustrations over delays and denials of legitimate claims, as millions of businesses await processing. Alongside this announcement, the IRS revealed plans to issue 30,000 letters to reclaim over $1 billion in ERC claims already disbursed for 2020 and 2021, raising questions about the agency's authority to "clawback" these funds. IRS Commissioner Danny Werfel emphasized that the new letters serve as an incentive for businesses that may have received erroneous ERC payments to come forward and resolve their issues through the VDP. While the IRS typically prefers to delay processing claims rather than pursue recovery after issuing refunds, it is prepared to assess and collect amounts due from more recent payments. Businesses receiving these recapture letters are advised to consult tax attorneys promptly to explore their options. The VDP, which runs until November 22, offers a 15% discount for participants, allowing them to repay only 85% of their original claims. However, not all businesses are eligible; those who have already received a recapture letter or are under investigation may be excluded. To apply, employers must complete Form 15434 and submit it through the IRS Document Upload Tool, ensuring compliance with the program's requirements. As the deadline approaches, taxpayers are urged to seek guidance from tax professionals to determine their eligibility and navigate the complexities of the ERC claims process.