IRS Reopens Voluntary Disclosure Program: Your Last Chance to Fix Business ERC Claims Before the IRS Does It for You

The IRS has reopened its Voluntary Disclosure Program (VDP) for businesses with improper Employee Retention Credit (ERC) claims, providing a limited window to correct errors and avoid future penalties. This initiative, running through November 22, 2024, allows businesses to come forward and correct their ERC claims at a 15% discount, helping them steer clear of audits, penalties, and interest.The IRS has already initiated over 460 false disclosure investigations, but there’s still time to act.

Uncovering and Prosecuting ERC Fraud is a Top Priority for the IRS

The reopening is part of the IRS’ intensified effort to address widespread ERC fraud. The agency has already sent 28,000 disallowance letters, preventing nearly $5 billion in improper payments, and is preparing to send up to 30,000 more letters this fall to recapture over $1 billion in erroneous claims. The IRS isn't kidding around; uncovering and prosecuting ERC fraud is a top priority, and this focus will not change anytime soon.

VDP Offers Discounts, Limited Time to Participate

Businesses caught in this compliance net have two options: participate in the VDP and potentially save significant costs or face the likelihood of audits and other enforcement actions. The VDP provides a unique opportunity to resolve improper claims with a discount, but this opportunity is limited. Companies that receive one of the IRS’s recapture letters will be ineligible to participate in the program for that specific period, making it crucial to act before any compliance action is taken.

Beyond the VDP, the IRS also offers a Claim Withdrawal Program for businesses with pending ERC claims that have not yet been processed. The program allows them to withdraw their claims without incurring penalties or interest, which could be a wise option for those unsure about their claim’s validity.

The IRS' renewed focus on ERC compliance includes thousands of audits, promoter investigations, and even criminal prosecutions. As of July 2024, the agency had initiated 460 criminal cases related to ERC fraud, leading to several convictions and significant penalties. With the IRS' attention firmly fixed on ERC claims, businesses must know their options and proactively address any potential issues.

Discuss Your Options with Washington D.C. Tax Lawyer Kevin E. Thorn

If you believe your business may have an improper ERC claim, it’s crucial to understand your options before the IRS takes action. Please call 202-349-4033 or contact us online to request an appointment with Washington D.C. tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group. Kevin E. Thorn is a former IRS Attorney practicing for over 25 who can help you! Know your options and take control before it’s too late.