IRS unveils worker retention credit score ‘voluntary disclosure program’ 

The IRS has unveiled a “voluntary disclosure program” for companies that claimed a pandemic-era tax credit score in error and need to pay the cash again.

Price hundreds per worker, the worker retention tax credit score, or ERC, was designed to help small companies affected by the pandemic. The profitable tax break sparked a cottage trade of companies pushing employers to wrongly declare the credit score. 

The IRS unveiled a “particular withdrawal course of” for firms with pending claims in September. The brand new voluntary disclosure program affords candidates the prospect to repay credit acquired at a 20% low cost to cowl third-party promoter charges.  

Nonetheless, it is a “limited-time supply,” IRS Commissioner Danny Werfel mentioned throughout a press name on Thursday. The deadline to use to the voluntary disclosure program is March 22, 2024.

Extra from Private Finance:
Extra {couples} decide ‘DINK’ life-style. How that adjustments their funds
IRS waives $1 billion in penalties. This is how qualifies
3 year-end funding tax ideas from top-ranked monetary advisors

“We urge worker retention credit score recipients who assume they had been misled by promoters to assessment these particular applications, together with both the disclosure program or the withdrawal possibility, relying on their scenario,” Werfel mentioned.

The brand new program comes roughly two weeks after the IRS introduced it is sending greater than 20,000 ERC rejection letters to taxpayers as a part of its crackdown on “doubtful” filings. 

Werfel mentioned the IRS is sending one other spherical of letters to firms that wrongly acquired the ERC and people taxpayers is not going to be eligible for the voluntary disclosure program.

“It is for those who have acquired the declare, or acquired their credit score, and haven’t but heard from the IRS,” he mentioned.

To qualify for this system, firms should present the IRS with contact info for any advisors or tax preparers who assisted them with the misguided declare, together with particulars concerning the companies.  

Corporations can apply for this system by submitting Kind 15435, which may be submitted by way of the IRS’ doc add instrument.

Contributors will not owe curiosity or penalties in the event that they repay 80% of the credit score upon signing the closing settlement. Nonetheless, curiosity and penalties will apply for reimbursement through installment agreements.