Businesses with dubious ERC claims have another chance with the IRS

The IRS will reopen its voluntary disclosure program (VDP), allowing businesses to correct questionable employee retention credit (ERC) claims at a discount (Announcement 2024-30).

The revised VDP, which will end Nov. 22, allows businesses to repay improper ERC credit amounts, less a 15% discount, and allows them to avoid future audits, penalties, and interest, the IRS said Thursday in a news release. The terms are not as favorable as the first VDP, which included a 20% discount. That VDP, which ended in March, resulted in over 2,600 applications from ERC recipients with disclosures totaling $1.09 billion in credits.

The IRS will not charge program participants’ interest or penalties on any credits they repay on time. However, if employers cannot repay the required 85% of the credit at the time they sign the closing agreement, they will be required enter an alternative payment arrangement such as an installment agreement and may be required to pay penalties and interest in connection with that payment arrangement.