The Internal Revenue Service (IRS) has launched a new Voluntary Disclosure Program to help businesses repay the Employee Retention Credits (ERC) they received in error. The program allows employers to repay 80% of the claim received and runs through March 22, 2024. The IRS is also sending letters to employers with proposed tax adjustments to recapture erroneously claimed ERC. Employers must apply to the program by March 22, 2024, and provide information about advisors or tax preparers who assisted them with their claim. The IRS continues to accept and process requests to withdraw pending ERC claims.
The IRS has introduced a "voluntary disclosure program" for businesses that mistakenly claimed a pandemic-era tax credit and wish to repay the funds. The employee retention tax credit (ERC), intended to aid small businesses affected by Covid-19, led to some companies wrongly claiming the credit due to third-party promoters. The new program allows applicants to repay the credits received at a 20% discount to cover promoter fees, but the deadline to apply is March 22, 2024. The IRS is also sending rejection letters to taxpayers who filed dubious ERC claims and those who wrongly received the credit are not eligible for the voluntary disclosure program.
The Internal Revenue Service (IRS) is sending over 20,000 letters to taxpayers notifying them of disallowed Employee Retention Credit (ERC) claims, targeting entities that did not exist or did not have paid employees during the eligibility period. This is part of the IRS's efforts to combat misleading marketing campaigns that have targeted small businesses and organizations. The IRS is also launching a voluntary disclosure program for those who received questionable payments to avoid future IRS action. The disallowance letters aim to protect taxpayers from audits, penalties, and interest, prevent incorrect refunds from going to ERC promoters, and save IRS resources. Taxpayers can respond with supporting documentation or file an administrative appeal if they disagree with the disallowance. The IRS is also accepting requests to withdraw pending ERC claims to avoid repayment, interest, and penalties.
