IRS Reopens ERC Voluntary Disclosure Program While Continuing to Aggressively Pursue Enforcement

The Internal Revenue Service (IRS) has reopened the Employee Retention Credit (ERC) Voluntary Disclosure Program through November 22, 2024. As a result, submitting an application under the ERC Voluntary Disclosure Program is currently one of several potential options for business owners who have improperly claimed the ERC. At the same time, however, the IRS has also reaffirmed its commitment to aggressively pursuing enforcement—with improper ERC claims carrying civil or criminal implications depending on the circumstances involved. Learn more from Maryland tax attorney Kevin E. Thorn.

Applying for Relief Under the Reopened ERC Voluntary Disclosure Program

According to the IRS, it received more than 2,600 applications under the original ERC Voluntary Disclosure Program before the program closed in March of this year. These applications involved an estimated $1.09 billion in fraudulent credits and refunds. By reopening the ERC Voluntary Disclosure Program, the IRS hopes to encourage more business owners to come forward and voluntarily repay their improper credits or refunds—though businesses can retain 15 percent of their improper credits or refunds this time around.

The IRS has modified the eligibility criteria for the ERC Voluntary Disclosure Program, so business owners who are thinking about submitting an application will want to review the revised eligibility criteria with an experienced Maryland tax attorney. While relief isn’t guaranteed for eligible businesses that file, filing when a business isn’t eligible can increase the business’s risk of facing an audit or investigation even further.

Alternatives to Submitting a Voluntary Disclosure Application

Let’s say your business isn’t eligible to submit an application under the reopened Voluntary Disclosure Program. What other options are available if you have concerns about facing IRS scrutiny for ERC fraud?

The answer to this question depends on the circumstances at hand. For example, if the IRS hasn’t yet processed your business’ ERC claim, then filing an amended return or withdrawal application could be the best path forward. On the other hand, if your business received a substantial credit and you have concerns about facing accusations of willful ERC fraud, then you may need to pursue an alternate route focused on avoiding criminal prosecution.

Risks of Facing ERC Fraud Allegations from the IRS

Regardless of the circumstances at hand, failing to proactively resolve ERC-related concerns can have substantial risks. Even when the IRS doesn’t pursue criminal charges, audits can still lead to substantial liability for back taxes, interest and penalties. While the IRS is encouraging business owners to resolve their ERC-related issues proactively, it is also “intensifying audits” focused on ERC fraud, and it is not hesitating to pursue criminal charges when warranted.

Schedule a Call with Maryland Tax Attorney Kevin E. Thorn

If you have questions about the reopened ERC Voluntary Disclosure Programs or the alternatives that are available for proactively resolving ERC-related concerns, we invite you to get in touch. To schedule a call with Maryland tax attorney Kevin E. Thorn, please contact us confidentially online today.