Yes, the IRS is offering relief for businesses that made ineligible Employee Retention Credit (ERC) claims. This includes options to withdraw incorrect claims and a Voluntary Disclosure Program (VDP).

  1. Withdrawal Option: Employers can withdraw their ERC claims if they meet certain criteria, such as filing an adjusted return solely to claim the ERC and not yet receiving or cashing the refund. This process allows businesses to avoid penalties, interest, and audits for incorrect claims. IRS,​ IRS
  2. Voluntary Disclosure Program (VDP): Open until November 22, 2024, this program allows businesses that received ERC payments but later determined they were ineligible to return the funds with a 15% discount on the repayment. This helps businesses avoid potential penalties, interest, and future audits​ GovDelivery.

The IRS continues to address improper ERC claims and encourages businesses to consult with trusted tax professionals to navigate the process.

For business owners who filed potentially ineligible Employee Retention Credit (ERC) claims, the IRS provides a few steps to take in order to avoid further complications:

  1. Review Eligibility: Double-check your ERC eligibility. The IRS has noted that aggressive marketing has led to many businesses mistakenly claiming the credit. If unsure, use the IRS ERC Eligibility Checklist or consult a tax professional​. IRS, ​GovDelivery
  2. Withdraw the Claim: If you believe your ERC claim was incorrect, you can use the IRS claim withdrawal process. This stops the IRS from processing the claim and avoids penalties or interest. Ensure that:
    • You filed an adjusted return only for the ERC.
    • The IRS hasn’t paid the refund yet, or you haven’t cashed the check​. IRS
  3. Voluntary Disclosure Program (VDP): If you’ve already received an ERC payment but later realized you’re ineligible, the Voluntary Disclosure Program allows you to return the funds with a 15% discount before November 22, 2024. This helps prevent penalties and audits. GovDelivery, ​IRS
  4. Consult a Trusted Tax Professional: It’s important to seek guidance from a tax expert familiar with the ERC’s complex rules to ensure you’re making the right moves and not being misled by aggressive promoters​. IRS

By acting now, business owners can avoid future penalties, audits, or legal consequences. Have questions? Give us a call at (206) 838-3800 (Bellevue) or (425) 788-1544 for Duvall.

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