IRS Reopens Voluntary Disclosure Program for Businesses with Problematic Employee Retention Credit Claims

The Internal Revenue Service (IRS) has revealed the resuming of the Voluntary Disclosure Program (VDP) for organizations lookingfor to right inappropriate Employee Retention Credit (ERC) claims. This effort is part of the IRS’s continuous compliance efforts and provides services a possibility to rectify mistakes in their ERC declares while preventing future audits, charges, and interest. The program will run through November 22, 2024, and supplies a 15% discountrate on payments, alittle less than the 20% discountrate provided in the veryfirst VDP that concluded in March.

The IRS is likewise magnifying its compliance actions by sendingout up to 30,000 letters intended at regaining over $1 billion in incorrect ERC claims. These letters will target declares made for Tax Year 2021 and some later-filed declares from Tax Year2020 Businesses that get these regain letters will be disqualified to takepart in the Voluntary Disclosure Program for the pertinent calendar quarter.

Key Points:

• Reopened Voluntary Disclosure Program: The VDP is offered through November 22, 2024, permitting companies to proper inappropriate ERC declares with a 15% discountrate on payments. This uses a method to prevent future compliance actions by the IRS.
• Increased Compliance Efforts: The IRS strategies to sendout up to 30,000 letters this fall to organizations with inappropriate ERC declares, representing more than $1 billion. These regain letters will inform taxpayers that the IRS is reversing or recovering their previous credits.
• Impact of Improper Claims: The IRS has currently determined substantial quantities of inappropriate declares from Tax Years 2020 and2021 These brand-new letters are anticipated to address bigger declares due to the increased ERC optimum in 2021.
• Separate Claim Withdrawal Program: The IRS continues to motivate organizations