Dear [CLIENT NAME]:

The IRS is offering a new Employee Retention Credit (ERC) Voluntary Disclosure Program, under which eligible taxpayers can repay only 80% of the gross amount of credit erroneously claimed, while retaining the remaining 20%. The relief may also include waivers of penalties and interest.

This program is being offered to assist businesses that may have used ERC firms that told them that they were eligible for the ERC when they were not. The IRS is heavily auditing this area and is imposing significant penalties and interest against ineligible businesses that received the credit.

Acknowledging that many of these businesses did not understand all the requirements to qualify for the credit and relied on what they were told by aggressive ERC firms, the IRS is allowing taxpayers to come forward and return the money, less 20% of what was received to help cover the fees that may have been paid to these ERC firms and that the taxpayer likely cannot recover.

However, businesses must apply for the program by March 22, 2024, and will have to either repay the full amount due (the 80% amount mentioned above) or enter into an installment agreement if approved by the program.

Please contact us right away if you have applied for the ERC, even if you haven’t yet received the money. There are a lot of factors we must weigh to determine if you are eligible for this relief and whether you should consider applying for this program.

This is not something that we can wait until the last minute to decide, because if the IRS contacts you before you apply for the program you may become ineligible for the relief being offered.

Sincerely,

Your tax professional