February 16, 2024


The Employee Retention Credit (ERC) was a lifeline thrown by the government during the COVID-19 pandemic to help businesses keep their employees on the payroll. It allowed eligible employers to receive a refundable tax credit – 70% of the qualified wages (increased from 50% before 2021) paid to employees between March 12, 2020, and July 1, 2021.

You might remember the barrage of TV ads a while back, promising hefty tax refunds to businesses applying for the ERC. These ads definitely caught the eye, but what they glossed over was the strict eligibility criteria required for the credit.

The IRS has been proactive in issuing reminders for businesses to double-check the ERC eligibility criteria due to ongoing concerns about misleading promotions pushing ineligible claims.

In response to these issues, the IRS unveiled a New Voluntary Disclosure Program in December 2023. This initiative aims to shield small businesses from the fallout of questionable ERC claims by offering a pathway to rectify these claims at a reduced cost.

Key Benefits of the ERC Voluntary Disclosure Program:

  • Participants are required to repay only 80% of the received credit, acknowledging that many businesses never saw the full amount due to fees taken by ERC promoters.
  • No need to repay any interest the IRS may have paid on the credit.
  • No need to amend income tax returns to adjust wage expenses.
  • The 20% discount on the repayment amount won’t be taxed.
  • No penalties or interest will be charged on the claimed ERC amount.
  • Claims settled through this program will be exempt from IRS examination.

However, the clock is ticking, with the application deadline set for March 22, 2024. Employers interested in this opportunity should submit Form 15434 via the IRS Document Upload Tool. For those who might struggle to repay the adjusted 80%, installment agreements may be an option upon review.

Additionally, the IRS has introduced an ERC withdrawal program for employers who wish to retract their ERC claim before processing, under specific conditions.

For anyone who’s navigated the ERC claim process and is now navigating uncertainties or has been misled by ERC promotion, our office is here to help. Whether it’s reviewing your claim’s validity or guiding you through the IRS’s new programs, don’t hesitate to reach out for support.

Let’s make sure you’re on solid ground with your ERC claim. For detailed instructions on withdrawing your ERC claim, visit IRS.gov/withdrawmyERC, and for any assistance or review needs, our office is just a call or email away.