IRS Announces New Voluntary ERC Repayment program

The IRS has now announced a voluntary disclosure program that can allow employers with erroneous employee retention credit claims to avoid potential penalties, interest and civil litigation. The program will first settle the ERC claim for purposes of the employer's employment tax obligations via eliminating their ERC eligibility while allowing the employer to retain 20% of the claimed ERC amount. The disclosure also resolves the corresponding adjustment for income tax expense. Individuals are entitled to participate in the program if (1) they are not under criminal investigation and have not been notified by the IRS of a forthcoming criminal investigation, (2) the IRS has not received information from a third party about the employer's noncompliance, (3) the individual is not under employment tax examination for any tax period for which the individual is applying for the program and (4) the individual has not already received a notice and demand for repayment for all or a part of the claimed ERC. If the terms are satisfied, the employer must repay 80% of the amount claimed (including refundable and non-refundable portions) and will not be responsible for repaying overpayment interest received, and will not be charged underpayment interest. The individual will not be deemed to receive taxable income by way of repaying only 80% of the claimed amount. For more information on the ERC, visit Tax Facts Online. : Q . Note: Q is updated.