Voluntary Disclosure Program Announced For Pandemic-Related Employee Retention Credits

On Dec. 21, 2023, the IRS announced the Employee Retention Credit Voluntary Disclosure Program (ERC-VDP), which helps eligible taxpayers pay back the money they had received for erroneously filed Employee Retention Credit (ERC) claims. This recently announced program is the latest step taken by the IRS in addressing the perceived large-scale fraud involved in ERC claims filed by taxpayers with the help of promoters that collected sizable commissions. The program provides taxpayers with the opportunity to keep 20% of the claimed ERC amount (generally corresponding to the portion typically paid to such promoters), provided the application is made by March 22, 2024. The most recent program follows the announcement of a moratorium on processing new ERC claims and increased scrutiny of pending ERC claims, as well as the introduction of withdrawal procedures with respect to ERC claims that were not previously processed. As pointed out in a prior Kramer Levin client alert,