IRS Reopens Voluntary Disclosure Program for Employee Retention Credit Claims: What You Need to Know

The Internal Revenue Service (IRS) has recently announced a limited-time reopening of the Employee Retention Credit (ERC) Voluntary Disclosure Program (VDP). This initiative aims to assist businesses in rectifying improper ERC claims and avoiding potential penalties. As a leading CPA firm, XOA TAX is here to guide you through the complexities of this program and ensure your business remains compliant.

Understanding the Employee Retention Credit and the VDP

The Employee Retention Credit was introduced as a relief measure during the pandemic to help businesses retain employees. However, due to aggressive marketing and misunderstandings, many businesses have erroneously claimed this credit. The Voluntary Disclosure Program offers an opportunity for these businesses to come forward, correct their mistakes, and mitigate potential risks.

Key Features of the Reopened VDP

• Limited-Time Offer: The program is open until November 22, 2024.
• Repayment Terms: Participants are required to repay 85% of the ERC funds received, retaining 15% as a concession.
• No Penalties or Interest: By participating, businesses can avoid future audits, penalties, and interest associated with improper claims.
• Eligibility Focus: The program specifically targets claims made for tax periods in 2021.

Eligibility Criteria

To qualify for the VDP, your business must meet the following conditions:

1. Erroneous ERC Receipt: You must have received ERC funds but later determined ineligibility.
2. No Ongoing Investigations: You should not be under any criminal investigation or IRS employment tax examination for the periods in question.
3. No Repayment Notices: You must not have received a notice demanding repayment of the claimed ERC.

Steps to Participate in the VDP

1. Prepare Documentation: Gather all relevant documents related to your ERC claims.
2. Submit Form 15434: Complete and electronically submit Form 15434, the application for the ERC Voluntary Disclosure Program.
3. Make Repayment: Use the IRS Electronic Federal Tax Payment System (EFTPS) to repay the required 85% of the ERC funds received.
4. Sign Closing Agreement: Upon acceptance, sign and return the closing agreement provided by the IRS.

Why You Should Act Now

• Avoid Increased Scrutiny: The IRS plans to mail up to 30,000 letters to businesses regarding potentially improper claims, representing over $1 billion in claims.
• Mitigate Financial Risks: Participating in the VDP helps you avoid substantial penalties, interest, and the possibility of criminal charges.
• Peace of Mind: Correcting any erroneous claims now ensures compliance and reduces future tax-related stress.

How XOA TAX Can Help

Navigating IRS programs and tax regulations can be daunting. XOA TAX offers expert guidance to help you:

• Assess Eligibility: Determine if your business qualifies for the VDP.
• Prepare Documentation: Ensure all forms and documents are accurately completed.
• Facilitate Communication: Act as a liaison between your business and the IRS.
• Strategize Repayment: Develop a repayment plan that aligns with your financial situation.

Conclusion

The reopening of the ERC Voluntary Disclosure Program presents a crucial opportunity for businesses to rectify past mistakes and secure their financial future. With the November 22 deadline approaching, now is the time to act.

Secure your business’s compliance and peace of mind today.

Contact XOA TAX to schedule a consultation with our tax professionals.

• Phone: (714) 594-6986
• Email: [email protected]

At XOA TAX, we’re committed to helping your business navigate the complexities of tax compliance with confidence.