On August 15, the Internal Revenue Service officially reopened its Employee Retention Tax Credit (ERTC) Voluntary Disclosure Program. The program allows employers to repay ERTC payments they have already received, without liability for penalties, if upon further review the employers believe their initial ERTC claims were made in error. The Voluntary Disclosure Program will remain open until November 22, 2024.

Also included in the announcement of the reopening of the Voluntary Disclosure Program was an IRS statement that the agency will send up to 30,000 letters to taxpayers whose already-paid ERTC claims the agency has found to be invalid. The IRS said that these letters will revoke claims from tax year 2021 and some late-filed claims from tax year 2020. The agency expects to claw back more than $1 billion in improperly paid ERTC claims.

The reopening of the Voluntary Disclosure Program “provides a final window of opportunity for those misled businesses to make adjustments and avoid future compliance actions by the IRS,” said IRS Commissioner Danny Werfel. “This new round of letters serves as another incentive for businesses that believe they received an erroneous Employee Retention Credit to come forward and participate in the disclosure program and resolve the matter on more favorable terms.”

Prospects: The IRS has already collected more than $1 billion in erroneously paid ERTC claims under the first round of the Voluntary Disclosure Program and expects to collect at least that much more in this round. The agency is also planning to send 28,000 denial letters on ERTC claims, amounting to as much as $5 billion in claims that will be denied.

NAIFA Staff Contact: Jayne Fitzgerald – Director – Government Relations, at jfitzgerald@naifa.org.