ERC Update: IRS Provides Details Of Second Employee Retention Credit Voluntary Disclosure Program

The IRS has announced a second Employee Retention Credit (ERC) Voluntary Disclosure Program, running through November 22, 2024, which allows businesses to correct improper payments at a 15% discount and avoid future audits, penalties, and interest. This reopening of the ERC Voluntary Disclosure Program only applies to tax periods in 2021 and aims to assist businesses that may have received ERC refunds based on "questionable claims," often generated by what the IRS views as "aggressive marketing tactics from unscrupulous promoters."

Those accepted into the program will need to repay only 85% of the credits they received for tax periods in 2021. In addition to the 15% discount, if the IRS paid interest on the ERC refund, the taxpayer does not need to repay the interest. Employers unable to pay the full 85% may qualify for an Installment Agreement, which requires the submission of an IRS Collection Information Statement (Form 433-B) and supporting documents. The IRS