IRS Starts Program for Businesses to Return Wrongly Claimed Funds

Businesses that missed the opportunity to apply for the Employee Retention Credit (ERC) Voluntary Disclosure Program now have a second chance, specifically for tax periods in 2021. However, this new version does not apply to ERC claims from 2020. Accepted applicants must repay 85% of the credit received, but any interest paid by the IRS on an ERC refund claim does not need to be repaid. To participate in the program, businesses must provide the IRS with detailed information about any advisors or tax preparers involved in their claims, including names, addresses, and services rendered. Eligibility for the program requires that the business has not received a Letter 6577-C or any IRS notice demanding repayment, and that the IRS has not been alerted to non-compliance through third-party information or enforcement actions. For those who do not qualify for the program but have submitted questionable claims, the IRS offers a withdrawal option. This allows businesses to retract their ERC claims without facing future repayment, interest, or penalties, provided they have not yet received a refund. The IRS encourages businesses unsure of their best course of action to consult IRS Announcement 2024-30 and the IRS website for further guidance. It is important to note that businesses receiving a recapture letter are ineligible for the Voluntary Disclosure Program for any quarters mentioned in the letter. This initiative aims to assist businesses in correcting errors related to ERC claims.