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Background:
Millions of Employee Retention Credit (ERC) claims have been filed with the IRS as a result of the COVID-19 pandemic, with millions of taxpayers already receiving their refunds and others still waiting to receive refund checks. The IRS audits and Appeals work has commenced with a fury at a dizzying pace. While many appropriate ERC claims have been filed, the IRS has seen a number of erroneous claims as well. On December 21st, the IRS launched a new initiative to address the issue of erroneous ERC claims. The Voluntary Disclosure Program, part of a broader IRS effort to combat these issues, will be operational until March 22, 2024. It offers an opportunity for eligible businesses to address their potentially erroneous ERC claims by repaying only 80% of the credit amount received.
Key Highlights of the ERC Voluntary Disclosure Program:
- Deadline for Application: Eligible businesses have until March 22, 2024, to apply for the ERC Voluntary Disclosure Program.
- Repayment Terms: Accepted businesses are only required to repay 80% of the ERC amount they received. The 80% repayment is not required to be repaid until closing.
- Interest Exemption: Businesses are not required to repay any interest received on their ERC refund claims.
- No Requirement To Amend for Wage Expense: Businesses that are accepted into the Voluntary Disclosure Program are not required to amend their income tax returns to reduce their wage expense.
- Installment Agreements: Businesses facing difficulties in repaying the full 80% can seek an installment agreement, subject to review and acceptance of Form 433-B.
Important Notes:
- No Penalties or Interest: Participants repaying the credit under the program's terms will not incur additional interest or penalties.
- Installment Agreement Considerations: Businesses opting for an installment agreement to repay the 80% may face standard penalties and interest.
Eligibility Criteria for Application:
To be eligible for the program, businesses must:
- Not be under any criminal investigation or have been notified of such by the IRS.
- Not be under an IRS employment tax examination for the relevant period.
- Not have received a notice or demand for repayment of the ERC.
- Not have any third-party or enforcement action for reported noncompliance.
Additionally, applicants must provide certain details regarding any advisors or tax preparers involved in their ERC claims, as outlined in IRS Announcement 2024-3.
Application Process:
- Form Submission: Complete and submit Form 15434 via the IRS Document Upload Tool. Third-party payroll processors must file this form on behalf of employers.
- IRS Guidance and FAQs: Consult the IRS FAQs for detailed information and guidance.
Post-Approval Steps:
Upon approval, the IRS will issue a closing agreement. Payment options include online or phone transactions through EFTPS. Employers considering installment agreements should be aware of potential penalties and interest charges going forward.
We urge you to carefully evaluate your position regarding this program and we stand ready to provide any needed assistance or clarification. Chamberlain Hrdlicka has many tax law specialists who have counseled many clients regarding ERC, and have vast knowledge and experience navigating prior IRS Voluntary Disclosure Programs and Settlement Initiatives.
Senior AssociateAlissa Gipson is a Senior Associate in the Tax Controversy, International Tax, State and Local Tax and Tax Planning sections in the Houston office. Ms. Gipson’s experience includes assisting clients with examinations and ...
Senior CounselAsher Fried is a senior counsel in the Tax Controversy & Litigation Section of Chamberlain Hrdlicka in the Houston office.
Asher has significant experience representing clients in federal and state corporate and partnership ...
ShareholderDavid Calvillo delivers a multidisciplinary perspective to his clients from the Firm’s offices in Houston and San Antonio.
As an accomplished board-certified civil trial lawyer, professional neutral, Certified Public ...
ShareholderPractice Areas
Hale Sheppard is a partner in the Tax Controversy Section of Chamberlain Hrdlicka. He defends clients in tax audits, tax appeals, and Tax Court litigation, covering both domestic and international issues. Hale's ...
ShareholderJaime Vasquez is a tax attorney in San Antonio. Mr. Vasquez is the Managing Shareholder of Chamberlain's San Antonio Office.
Mr. Vasquez concentrates his practice on federal, state, and international transactional and tax ...
AssociateJonathan Stasney is an associate in the Tax Controversy Practice Group. He graduated from Texas A&M University, and received his law degree and an LLM in Taxation from the University of Houston Law Center.
Prior to attending law ...
ShareholderJuan F. Vasquez, Jr. is a Shareholder in Houston and San Antonio. Mr. Vasquez serves as the Chair of the Firm's Tax Controversy Section and concentrates his practice on federal, state and local tax controversy matters, including in ...
Special CounselKarl is a Special Counsel attorney in The Tax Controversy & Litigation Practice Group. He has successfully represented all types and sizes of taxpayers, including professional service firms, clinical research companies ...
ShareholderKevin Sweeney is an experienced tax attorney and former federal prosecutor who specializes in defending clients in civil and criminal tax controversy and litigation matters. He focuses on high-stakes IRS audits, civil tax ...
ShareholderLeo Unzeitig is a shareholder in Chamberlain Hrdlicka’s San Antonio office. He assists with a wide range of federal tax controversy and litigation matters at all stages before the Internal Revenue Service and federal courts. Leo ...
ShareholderPeter A. Lowy, a shareholder in Chamberlain Hrdlicka’s Houston office, is best known for his tax controversy work and deep experience in the energy sector. He also advises corporations and other taxpayers in a broad spectrum of ...
AssociateSam Kuzniewski is a member of the Tax Controversy group in the Atlanta office.
Prior to joining Chamberlain Hrdlicka, Sam earned his LL.M. in taxation at the University of Florida Levin College of Law and his J.D. at the University of ...
ShareholderStuart Clements advises both individual and institutional clients in federal, state, and international tax planning and controversy matters, including income, employment, and excise tax considerations. Mr. Clements has ...
AssociateTania Albuja is an associate attorney in the Tax Controversy and Litigation group in Houston. She received her J.D. from the University of Houston Law Center and her LL.M in Taxation from the Georgetown University Law Center.
Prior to ...
ShareholderTom Cullinan is a Shareholder in the Firm's Atlanta office. Tom joined the Firm from the IRS, where he served as the Counselor to the IRS Commissioner and then as the acting IRS Chief of Staff.
While at the IRS, Tom was a member of the ...
AssociateTristan Montaque is an Associate Attorney in the Tax Controversy and Litigation group in Chamberlain Hrdlicka’s Houston office. He received both his J.D. and LL.M in Taxation at the University of Florida Levin College of Law.
AssociateVictor J. Viser is an associate in Chamberlain Hrdlicka's San Antonio office. He focuses his practice on federal, state, and international tax planning and controversy matters.
Mr. Viser also has expertise on the Paycheck ...