Employers have until March 22 to apply to the Employee Retention Credit Voluntary Disclosure Program

The IRS’s deadline to apply to the Employee Retention Credit Voluntary Disclosure Program(ERC-VDP) is fast approaching. The ERC-VDP was developed by the IRSto assist employers who received but were not entitled to an Employee Retention Credit (ERC) to self-identify and repay that ERC. Employers must submit completed applications by 11:59 p.m. local time on March 22, 2024.

Do you qualify for the ERC-VDP?

Employers may apply to the program if they:

  • Previously claimed and received ERC but have determined they were not eligible for ERC for some or all quarters.
  • Are not under employment tax examination (audit) by the IRS.
  • Have not received an IRS letter denying an ERC claim. A denial letter does not disqualify ERC-VDP for any tax period(s) not covered in the letter.
  • Have not amended previously filed ERC claims to $0.

What are the benefits of participating in the ERC-VDP?

Employers who apply to the program enjoy three main benefits:

  1. Your repayment amount of the ERC is reduced to 80%.
  1. No interest or penalties will be assessed, provided full repayment is made at the time you send the signed ERC-VDA closing agreement to the IRS.
  1. The 20% payment reduction is not taxable income.

The IRS notes that failure to participate in the program can lead to “substantial interest and penalties and increase your risk of criminal investigation and prosecution.”

What is the disclosure process?

To apply to the ERC-VDP, employers should take the following steps:

  • Submit form 15434, Application for Employee Retention Credit Voluntary Disclosure Program, by March 22, 2024.
  • Use online filing at IRS.gov/dut and click the blue “Use the Document Upload Tool” box.
  • Review the application package and verify eligibility for the ERC-VDP; if approved, the IRS will provide a next-steps letter and closing agreement.
  • Make full payment of any amount due at the time of signing the ERC-VDP closing agreement, unless you are approved for an installment agreement.

Advance payment of ERC amounts at the time of application using the Electronic Federal Tax Payment System (EFTPS) is recommended by the IRS but not required.

How Wipfli can help

The ERC-VDP offers employers an option to rectify ERC-related errors. By voluntarily disclosing discrepancies, you can help ensure compliance and benefit from the intended tax relief. Please contact us if you would like additional information or assistance from our tax team.

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