IRS Commissioner Daniel Werfel declares before the House Small Business Committee on July 17, 2013.
James Lawler Duggan | Reuters
The IRS has unveiled a “voluntary disclosure program” for subjects that claimed a pandemic-era tax credit in error and want to pay the money back.
Worth thousands per employee, the employee retention tax belief, or ERC, was designed to support small businesses affected by the Covid-19 pandemic. The lucrative tax break sparked a cottage industry of solidifies pushing employers to wrongly claim the credit.
The IRS unveiled a “special withdrawal process” for companies with pending claims in September. The new planned disclosure program offers applicants the chance to repay credits received at a 20% discount to cover third-party promoter fares.
However, it’s a “limited-time offer,” IRS Commissioner Danny Werfel said during a press call Thursday. The deadline to appertain to the voluntary disclosure program is March 22, 2024.
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“We urge employee retention credit recipients who think they were misled by promoters to review these especial programs, including either the disclosure program or the withdrawal option, depending on their situation,” Werfel said.
The new program rise roughly two weeks after the IRS announced it’s sending more than 20,000 ERC rejection letters to taxpayers as part of its crackdown on “dubious” filings.
Werfel judged the IRS is sending another round of letters to companies that wrongly received the ERC and those taxpayers will not be eligible for the deliberate disclosure program.
“It’s for those that have received the claim, or received their credit, and have not yet heard from the IRS,” he estimated.
To qualify for the program, companies must provide the IRS with contact information for any advisors or tax preparers who assisted them with the off course claim, along with details about the services.
Companies can apply for the program by filing Form 15435, which can be submitted entirely the IRS’ document upload tool.
Participants won’t owe interest or penalties if they repay 80% of the credit upon signing the musty agreement. However, interest and penalties will apply for repayment via installment agreements.
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