IRS Launches Employee Retention Credit Amnesty Program

The IRS has launched a new program for businesses that claimed an Employee Retention Credit in error and want to pay the money back.

The agency’s Voluntary Disclosure Program, announced Dec. 21, 2023, allows repayment of 80% of the credit that employers received.

The IRS will not charge program participants interest or penalties on any credits they repay.

The ERC program was implemented during the COVID-19 pandemic to help businesses that continued to pay employees.

But the agency said many small businesses were misled into filing ineligible ERC claims through aggressive marketing and questionable schemes.

Option for Employers

“The disclosure program provides a much-needed option for employers who were pulled into these claims and now realize they shouldn’t have applied,” said IRS Commissioner Danny Werfel.

“We understand that there are many employers eager to correct their error, but who remain concerned about their ability to pay back the portion of the credit that has been lost to the promoter that brought them into this mess.”

The new disclosure program is part of a larger effort to stop the aggressive marketing surrounding the ERC.

“This new option provides the relief these taxpayers requested.”

IRS’ Danny Werfel

“The new initiative will also help with our ongoing efforts to gather information on promoters who created this situation by aggressively pushing people to apply for the credit,” Werfel said.

The IRS set the repayment threshold at 80% as many employers were assessed fees or charges by ERC promoters.

However, if an employer is unable to repay the required 80% of the credit, they will be subject to penalties and interest in connection with entering into an installment agreement.

“This new option, with an opportunity to get right with a lower financial cost, provides the relief these taxpayers requested,” said Werfel. 

Program Applications

An employer can apply for the voluntary disclosure program if they:

• Are not under criminal investigation and have not been notified that they are under criminal investigation
• Are not under an IRS employment tax examination for the tax period for which they’re applying to the Voluntary Disclosure Program
• Have not received an IRS notice and demand for repayment of part or all of the ERC
• Have not received information from a third party that the taxpayer is not in compliance or has not acquired information directly related to the noncompliance from an enforcement action

To qualify, employers akso must provide the IRS with information about any advisors or tax preparers who assisted with their claim.

Employers can apply by filling out Form 15434, and submit it using the IRS Document Upload Tool.

The deadline to submit an application is March 22, 2024.

The agency also set up an FAQ to help employers understand the terms of the program.