IRS Announces Second Voluntary Disclosure Program for Dubious ERC Claims

The IRS announced a second Employee Retention Credit Voluntary Disclosure Program on August 15, 2024. The program is intended to offer relief to taxpayers who may have been misled by aggressive promoters into filing dubious ERC claims. Under the new program, taxpayers must repay 85% of improper ERC payments. Any interest a taxpayer received as part of an ERC claim does not need to be repaid and will not be included in taxable income. Additionally, taxpayers who participate in the voluntary disclosure program will not be subject to penalties.  

The program is limited to ERC claims filed for the 2021 tax periods. Taxpayers will have from August 15, 2024, until November 22, 2024, to apply for the program. The terms of the program are substantially similar to the first program, which ran from December 21, 2023, until March 22, 2024.  

Additional Enforcement 

The IRS also announced another wave of letters disallowing ERC claims. The agency indicated that up to 30,000 additional letters could be sent in this round. The IRS has already sent thousands of letters disallowing ERC claims for tax periods 2020 and 2021. Taxpayers who receive a disallowance letter are ineligible to participate in the Voluntary Disclosure Program. For those taxpayers who have pending ERC claims who now believe their claim may be erroneous, the Voluntary Withdrawal Program remains open as well. 

The IRS indicated in its news release that once this program expires, there will not be another opportunity. If you have questions about these ERC programs, please contact a member of our controversy team.