On Dec. 21, 2023, the IRS announced the launch of the highly-anticipated employee retention credit (ERC) voluntary disclosure program (VDP) and an accompanying series of frequently asked questions. The VDP is the latest effort by the IRS to combat aggressive marketing and fraudulent activity surrounding the credit, after previously announcing a moratorium on processing new credits (Sept. 18, 2023 Tax Alert), launching a separate program that allows taxpayers to return uncashed checks for ERCs claimed (Nov. 06, 2023 Tax Alert), and issuing 20,000 claim denial letters to taxpayers earlier in December. Eligible taxpayers have until March 22, 2024 to apply to the VDP, and those accepted will repay 80% of the credits they claimed without interest or penalties in exchange for providing information about any advisors or tax preparers who advised them in pursuing the ERC.
Given the opportunity to repay the credit at a 20% discount, the pervasive nature of the ERC promoter firms’ marketing, and the many warnings issued by the IRS against pursuing the credit aggressively, it is possible many taxpayers will pursue the VDP. Baker Tilly can assist with the analysis of if the program is the right fit for an organization. If the voluntary disclosure program is the best course of action Baker Tilly has an ERC team that can assist with preparing and submitting the voluntary disclosure information and working with the IRS to receive a closing letter.
The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.