01/02/2024 | News release | Distributed by Public on 01/02/2024 13:07
Specifically, the IRS has now published the procedures for a taxpayer to file an application to participate in the ERC Voluntary Disclosure Program and publicized the benefits of participating in the ERC Voluntary Disclosure Program. Taxpayers should quickly determine whether they intend to submit an application to participate in the ERC Voluntary Disclosure Program, however, because applications must be submitted by 11:59 pm local time on March 22, 2024.
A taxpayer who files an application that is accepted by the IRS receives the following benefits:
If a taxpayer does not participate in the ERC Voluntary Disclosure Program, the taxpayer remains subject to potential interest and penalties. Unlike other IRS Voluntary Disclosure programs (such as the Offshore Voluntary Disclosure Program), acceptance into the ERC Voluntary Disclosure program and/or withdrawal of pending ERC claims does not shield an employer from potential criminal investigation and prosecution for willfully filed fraudulent ERC claims. Accordingly, criminal charges are possible in serious cases, and participation in the ERC Voluntary Disclosure Program will not exempt the taxpayer from potential criminal investigation and prosecution.
A taxpayer may apply to the ERC Voluntary Disclosure Program only if all of the following requirements are met:
If an employer used a third-party payer (such as a professional employer organization), then the third-party payer will be the taxpayer that needs to apply to the ERC Voluntary Disclosure Program. In this case, the employer cannot apply on its own and will need to coordinate with the third-party payer to participate in the program.
If a taxpayer meets the above requirements, the taxpayer can apply for the ERC Voluntary Disclosure Program by filing the below materials using the IRS's Document Upload Tool:
As part of the ERC Voluntary Disclosure Program, the taxpayer will be required to provide information to the IRS on the Form 15434 about any advisors or tax preparers who advised or assisted the taxpayer with claiming the ERC.
Importantly, the ERC Voluntary Disclosure Program application must be filed by 11:59 pm local time on March 22, 2024.
The IRS will review a taxpayer's ERC Voluntary Disclosure Program application and determine whether it is accepted or rejected. If the application is accepted, the IRS will notify the taxpayer of the next steps, which will include signing and remitting a closing agreement and repaying 80% of the ERC received through the Electronic Federal Tax Payment System (EFTPS).
If a taxpayer is unable to make the full 80% repayment amount, the taxpayer may request that the IRS consider it for an installment agreement. To utilize this option, the taxpayer needs to include Form 433-B, Collection Information Statement for Businesses, in its ERC Voluntary Disclosure Program application, together with required supporting documents. A drawback of applying for an installment agreement, however, is that penalties and interest will apply from the installment agreement date. Offers in compromise are not an option under the ERC Voluntary Disclosure Program.
Alternatively, if the taxpayer's ERC Voluntary Disclosure Program application is rejected, the IRS will notify the taxpayer accordingly, explain why the application was rejected, and offer potential solutions. In some cases, taxpayers may be able to correct an error and resubmit the application package or file an amended tax return.
To discuss how your business may be affected by the ERC and the ERC Voluntary Disclosure Program, please contact the tax professionals at ArentFox Schiff.