The IRS Offers ERC Voluntary Disclosure Program Round 2

Published on August 16, 2024 by Cheryl Ganim in COVID-19

Businesses that want to pay back the money they received after filing Employee Retention Credit (ERC) claims in error for 2021 tax periods may come forward voluntarily by applying for IRS ERC Voluntary Disclosure (VDA) in the second round of this program which runs August 15, 2024, through 11:59 pm, November 22, 2024.

A 15% reduction and waiver of interest and penalties

The benefit to businesses who repay improperly claimed ERC refund claims is a 15% reduction in the amount required to be paid back, in addition to a waiver of interest and penalties. If the IRS paid interest on the employer’s ERC refund claim, the employer does not need to repay that interest.

If the organization filed amended 2021 income tax returns and paid tax on the ERC refund claim, those returns may be amended within the statute of limitations to refund the overpaid income tax.

Employers who cannot repay the required 85% of the credit may be considered for an installment agreement on a case-by-case basis but will be required to pay penalties and interest connected to a payment arrangement such as an installment agreement.

How to qualify

To qualify for this program:

• The participant must not be under criminal investigation or notified they will be subject to a criminal investigation.
• The participant must not have applied for First ERC-VDP for the same tax periods.
• The IRS must not have received any third-party information about the participant’s noncompliance.
• The participant must not be under an employment tax examination for any tax period(s) they’re applying for the Second ERC-VDP.
• The participant hasn’t been notified that the ERC is subject to recapture for the tax period(s) pertaining to the Second ERC-VDP.
• The participant has not received a notice and demand for repayment for all or part of the claimed ERC.
• The participant hasn’t already filed an amended return to eliminate the ERC.

What to do next

If you believe your business or non-profit organization may have filed an improper ERC refund claim and wish to come forward and repay the refund, contact us for assistance with the voluntary disclosure application. As always, our team of top ERC professionals are here to help.