Kostelantz Partner, Christopher Ferguson announces last call for the Internal Revenue Service’s Employee Retention Credit (ERC) Voluntary Disclosure Program.
The second iteration of the Internal Revenue Service‘s employee retention credit (“ERC”) voluntary disclosure program (the “ERC-VDP”) is set to expire next Friday, November 22, 2024. The first iteration of the program ran from December 22, 2023 to March 22, 2024 and, according to the IRS, resulted in the recovery of $1.1 billion in #ERC refunds. Over time, the IRS has continued to augment and refine the “red flags” that it views as the hallmarks of dubious ERC claims. On June 20, 2024, the IRS also announced that its preliminary review of its inventory of ERC claims resulted in a determination that 10 – 20% of ERC claims were clearly erroneous and another 60 – 70% presented an “unacceptable level of risk.”
While the IRS is currently preoccupied with processing its inventory of outstanding ERC claims, it has vowed to recover refunds for erroneously paid ERC claims and to seek penalties and interest against those claimants where appropriate. It has dangled this second iteration of its ERC-VDP program as a means for taxpayers who received refunds on illegitimate claims to avoid the more harsh potential outcomes associated with an IRS audit of their claim.
The IRS has put an end date of this offer of next Friday, November 22, however. Given that this is the second iteration of the program, it is unlikely there will be a third. Claimants who believe they were paid on a questionable ERC claim and are concerned about an IRS audit should carefully consider the ERC-VDP while it is still an option.
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