ERC Self-Disclosure Program Deadline Is March 22nd

In response to the widespread, aggressive marketing of the federal Employee Retention Credit (ERC) program by a number of unreliable firms, the Internal Revenue Service (IRS) developed a process to incentivize those who received the ERC, but later realized that they may not be eligible, to return the funds. The ERC Voluntary Disclosure Program (VDP) allows honest actors to repay most of the funding received without further penalties.

As a participant of the ERC-VDP:

You need to repay only 80 percent of the ERC you received as a credit on your return or as a refund.
You do not need to repay any interest you received on your ERC refund.
You do not have to amend income tax returns to reduce wage expense.
The 20 percent reduction is not taxable as income.
The IRS will not charge penalties or interest on the claimed ERC amount if you pay it in full (claimed ERC minus 20 percent) by the time you return your signed closing agreement to the IRS.
The IRS will not examine the ERC on your employment tax return for tax period(s) resolved within the terms of the ERC-VDP.

Businesses, tax-exempt organizations, and government entities are eligible to apply for the ERC-VDP for each tax period that meets all of the below-listed requirements:

Your ERC claimed on an employment tax return has been processed and paid as a refund, which you have cashed or deposited, or paid in the form of a credit applied to the tax period or another tax period.
You now think that you were entitled to $0 ERC.
You are not under employment tax examination (audit) by the IRS.
You are not under criminal investigation by the IRS.
The IRS has not reversed or notified you of intent to reverse your ERC to $0. For example, you received a letter or notice from the IRS disallowing your ERC.

The program is ending soon, with March 22, 2024 as the deadline to sign the closing and return the funds. Please note that any employer who received the ERC through a third party must have that third party apply on their behalf. Full information, Frequently Asked Questions, and instructions on how to apply are all available here.

Contact: Darius Kirstein, dkirstein@leadingageny.org, 518-867-8841