IRS Gives Second Chance for Voluntary Disclosure on Questionable ERC Claims

by Prof. Robert Bloink and Prof. William H. Byrnes

The IRS is continuing its aggressive enforcement initiative with respect to COVID-era employee retention tax credits (the ERC). The IRS announced last week that it will be reopening its voluntary disclosure program (VDP) for employee retention credit claims. This second round VDP will be available through November 22, 2024. While the revised VDP is not quite as generous as the initial program, employers who have claimed the ERC should pay close attention to this new opportunity. The IRS announcement shows just how seriously it takes erroneous or incorrect ERC claims. In the past weeks, the IRS has announced the results of its ongoing enforcement efforts—and also announced that it plans to mail thousands of additional letters to taxpayers with questionable ERC claims in the coming months. When in doubt, employers should carefully review their available options for disclosure or withdrawal to avoid a potentially detailed IRS review.

What is the IRS VDP?