Did you file an Employee Retention Credit (ERC) claim in error? Mistakes happen. That’s why the IRS recently introduced a new Voluntary Disclosure Program aimed at helping businesses rectify erroneous claims and repay the funds.
The program is open through March 22, 2024, allowing employers to reimburse the IRS for 80% of the claim they received. Why 80%? Many ERC promoters responsible for leading small businesses astray charged a percentage fee at the time of payment, resulting in recipients never receiving the full ERC amount.
To apply for the Voluntary Disclosure Program:
You’ll need to file Form 15434, Application for Employee Retention Credit Voluntary Disclosure Program, using the IRS Document Upload Tool. Additionally, if the ERC was claimed for any tax period ending in 2020, Form SS-10, Consent to Extend the Time to Assess Employment Taxes, must be submitted along with Form 15434.
Like most employers, you probably use a payroll company that reports, collects and pays employment taxes on your behalf. In such cases, the company — not you — must file Form 15434.
If a third party filed for the ERC on your behalf, they must complete Form 2848, Power of Attorney and Declaration of Representative.
Next steps:
If the IRS approves your application, you’ll be mailed a closing agreement. Repayment may be made online or by phone via the Electronic Federal Tax Payment System. If you’re unable to fulfill the required 80% repayment, the IRS may consider an installment agreement on a case-by-case basis, in which fees and penalties may apply.
Need an informed guide to navigate future situations like these — and protect your company’s interests? Reach out to the professionals at Magone & Company.