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Attention Employers: Employee Retention Credit (ERC) Voluntary Disclosure Program Ending Soon

During the Covid-19 pandemic, the Employee Retention Credit (ERC) was established by the government to support businesses in retaining their workforce. This program offered qualifying employers a refundable credit against certain employment taxes, amounting to 70% (increased from 50% before 2021) of the qualified wages paid to eligible employees between March 12, 2020, and July 1, 2021.


You might recall the surge of television commercials a few months ago, promising businesses significant tax refunds through filing for the ERC. While these ads grabbed the attention of many business owners, they often failed to mention the stringent eligibility criteria for claiming the credit.


In response to concerns about improper refund claims, the IRS introduced the ERC Voluntary Disclosure Program in December 2023.

This program aims to protect small businesses from misleading marketing tactics surrounding the ERC.


Under this program, eligible employers can repay only 80% of the ERC they received. This reduced repayment percentage aligns with the typical fee charged by ERC promoters, which is around 20%, ensuring that recipients aren't penalized for not receiving the full amount.


Additionally, employers who received interest on their ERC refund claim are not required to repay that interest. The reduction in the ERC repayment is not considered taxable income, and penalties and interest will not be imposed on the claimed ERC amount. Moreover, claims resolved under this program will not undergo IRS examination.


However, time is running out, as applications for the ERC Voluntary Disclosure Program must be submitted by March 22, 2024. To apply, employers must file Form 15434, Application for Employee Retention Credit Voluntary Disclosure Program, available on IRS.gov, using the IRS Document Upload Tool.


Employers who are unable to repay the required 80% of the credit may be considered for an installment agreement on a case-by-case basis, provided they submit Form 433-B, Collection Information Statement for Businesses, along with all required supporting documentation.


Furthermore, the IRS is offering an ERC withdrawal program for employers who have submitted a claim but wish to withdraw it before it's processed. To qualify for this withdrawal, specific criteria must be met, as outlined on IRS.gov/withdrawmyERC.


If you have concerns about the validity of your ERC claim or have fallen victim to misleading marketing, our office is here to assist you. Whether you need a review of your claim or guidance on participating in the IRS programs, please don't hesitate to contact us.


Remember, March 22, 2024, is the deadline for ERC Voluntary Disclosure Program applications, so act promptly to avoid missing out on this opportunity.

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