

News & Insights
News & Insights
September 2024
By: David T. Potts
The Journal Record
The Internal Revenue Service (IRS) has announced a second Employee Retention Credit (ERC) Voluntary Disclosure Program (VDP), which will run until November 22, 2024. The reopening of the VDP allows businesses with questionable claims to self-report and correct improper payments at a 15% discount and avoid future audits, penalties and interest.
This new program only applies to ERC claims for the 2021 tax year and does not cover credits for the 2020 year.
A variety of ERC recipients can apply for the second VDP. Any employer who already received the ERC for a tax period in 2021 for which it was not entitled can apply if the following are also true:
To apply for the VDP, employers must file Form 15434, Application for Employee Retention Credit Voluntary Disclosure Program, available on IRS.gov. Employers are expected to repay their full ERC, minus the 15% reduction allowed through the VDP.
To underscore the importance of participating in the VDP, the IRS also announced it plans to mail up to 30,000 new letters to reverse or recapture potentially more than $1 billion in improper ERC claims. Thousands more mailings on additional questionable payments will be made in the fall. It is highly advisable for employers to participate in the VDP if ERC was claimed and received to which the employer was not entitled. If you do not participate in the VDP to correct improper filings, you risk detection by the IRS, which could lead to substantial interest and penalties and increase the risk of criminal investigation and prosecution.