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The Internal Revenue Service ("IRS") published details regarding the second Employee Retention Credit Voluntary Disclosure Program (the "Disclosure Program") on August 15, 2024. The Disclosure Program will allow employers who previously received payments for their Employee Retention Credit ("ERC") to repay 85% of the credit received. In addition to forgiving the remaining 15% of the obligation, the Disclosure Program will also waive penalties and interest in full. The application window will remain open until November 22, 2024.
To participate, employers must execute a closing agreement that confirms that the employer is not entitled to the ERC and must disclose the name of any preparer or adviser who assisted the employer in applying for the credit. The Disclosure Program is available to any employers that have not already applied for the first Disclosure Program, are not under criminal investigation, are not under an IRS exam for the relevant tax period(s), have not received a Letter 6577-C, Employee Retention Credit Recapture or other similar notice, have not already filed an amended return to eliminate their ERC, and have not already received information from a third party that the employer is not in compliance.
Employers may apply by filing Form 15434, Application for Employee Retention Credit Voluntary Disclosure Program, which may be submitted through the IRS website. Under certain circumstances, employers may qualify for an installment agreement rather than repaying 85% of the credit as a lump sum. If an employer uses a third party to file payroll returns through the third party's Employer Identification Number, the third party must complete Form 15434. For employers who received the ERC but worried that their claim was frivolous, the Disclosure Program presents an opportunity to eliminate audit risk, penalties, and interest.
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