On July 17, 2013, IRS Commissioner Daniel Werfel testifies before the House Small Business Committee.
James Lawler DugganReuter
The IRS has announced a Voluntary Disclosure Program for businesses that mistakenly claimed pandemic-era tax credits and want their money back.
The Employee Retention Tax Credit (ERC), worth thousands of dollars per employee, was designed to help small businesses affected by the COVID-19 pandemic. This lucrative tax break has spawned a cottage industry of companies forcing employers to claim unfair tax breaks.
In September, the IRS announced a “special withdrawal process” for businesses with pending applications. The new voluntary disclosure program offers applicants the opportunity to repay credits received at a 20% discount to cover third-party promoter fees.
But this is a “limited-time offer,” IRS Commissioner Danny Wuerffel said at a press conference Thursday. The deadline to apply for the Voluntary Disclosure Program is March 22, 2024.
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“We encourage Employee Retention Credit recipients who believe they have been misled by their promoters to review special programs, such as disclosure programs and withdrawal options, depending on their circumstances,” Werfel said.
The new program comes about two weeks after the IRS announced it would send more than 20,000 ERC denial letters to taxpayers as part of a crackdown on “questionable” tax returns.
Werfel said the IRS is writing again to businesses that received ERCs in error and that those taxpayers will not be subject to the voluntary disclosure program.
“This is for people who have received a claim or received a credit but have not yet been contacted by the IRS,” he said.
To qualify for this program, businesses must provide the IRS with service details as well as contact information for the advisor or tax preparer who assisted with the erroneous claim.
Businesses can apply for the program by filing Form 15435. Form 15435 can be submitted through the IRS’s document upload tool.
Participants will not have to pay interest or penalties if they repay 80% of the credit upon signing the termination agreement. However, if you pay in installments, interest and penalties will apply.
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