The IRS has unveiled a new opportunity for businesses to correct improper Employee Retention Credit (ERC) claims made for the 2021 tax period. The second Employee Retention Credit Voluntary Disclosure Program (ERC-VDP) was officially launched on August 15, 2024, and will be available through November 22, 2024.

This initiative is designed to encourage businesses that may have received improper ERC payments to correct these errors voluntarily. By participating in the program, eligible taxpayers can avoid future audits, penalties, and interest arising from incorrect claims.

Key Features of the Program:

1. Repayment Requirement: Participating businesses must repay 85% of the improperly claimed amount. This percentage is slightly higher than the first ERC-VDP’s requirement of 80%.
2. Interest Considerations: If the IRS paid interest on the employer’s ERC refund claim, the business is not required to repay that interest.
3. Form Submission: Interested businesses must complete Form 15434, the Application for Employee Retention Credit Voluntary Disclosure Program, and submit it using the IRS Document Upload Tool.
4. Installment Agreement Option: Under certain conditions, businesses that are unable to repay the full amount at once may be eligible to set up an installment agreement.

This program provides businesses with a valuable opportunity to correct past mistakes with reduced financial consequences. Eligible employers must act quickly, as the program is only available for a limited time. For more detailed information, including who can apply and how to apply, visit the IRS’s official page on the ERC-VDP here.

With the launch of the second ERC-VDP, the IRS is offering a lifeline to businesses that may have made errors in their ERC claims for 2021. By taking advantage of this program, companies can avoid the potential headaches of future audits and additional financial burdens, allowing them to move forward with greater peace of mind.

For more details on this program, review the official IRS announcements here: News Release IR 2024-212, and News Release IR 2024-213.