The Employee Retention Tax Credit (ERTC) is the only pandemic-era tax incentive program still available to eligible companies. While the program has officially closed businesses still have time to claim for eligible activities in 2020 and 2021. Unfortunately, the ERTC has become a favorite of aggressive promoters and fraudsters. This is reflected in the multiple warnings issued by the IRS about the high-pressure tactics and misleading information used by bad actors. Despite this, the flow of improper or ineligible claims continued resulting in a processing moratorium and introduction of a new withdrawal program. While useful, these changes were designed to help those who had not yet received a credit payment.
For those companies that had already received payment, the IRS indicated there would be a voluntary disclosure program to help. Earlier this month, the details of the program were announced in IRS Announcement 2024-3 outlining how the program will work. Not only does it provide a way to resolve civil tax liabilities, but includes information on eligibility, program terms, repayment options, and more. It is certainly welcome news for companies facing potential fines, penalties, and interest. To help clients, prospects, and others, Wilson Lewis has summarized the key details below.
Any business that claimed the ERTC and received a credit or refund can participate provided the following conditions are met, including:
Those participating in the program will be required to comply with several terms, including:
To participate in the voluntary disclosure program taxpayers must complete and submit IRS Form 15434, Application for Employee Retention Credit Voluntary Disclosure Program by March 22, 2024. It is important to note the form and other documentation must be submitted electronically. There are several pieces of information which must be included, including:
Once this information is received the IRS will prepare a closing agreement and send it via mail. The business must sign and return it within 10 days of the mailing date. Full payment should be made on the date of the agreement’s execution. In the event full repayment is not possible, the taxpayer can be considered for an installment agreement.
The new voluntary disclosure agreement provides important relief to those who improperly received credit payments. However, the program is complex, and it is imperative to consult with a qualified tax advisor before program participation. If you have questions about the information outlined above or need assistance with a tax or accounting issue, Wilson Lewis can help. For additional information call 770-476-1004 or click here to contact us. We look forward to speaking with you soon.
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