IRS Creates ‘Voluntary Disclosure Program’ For Businesses Hit By Pandemic-Era Tax Credit

The Internal Revenue Service (IRS) has recently unveiled a ?voluntary disclosure program.? This program is for businesses that claim errors in pandemic-era tax credits and want to pay back the money. This new voluntary disclosure program offers businesses the chance to repay their received credits at a 20% discount. Also, this will cover third-party promoter fees. The deadline to apply for this program is 22 March 2024.

Earlier, the IRS designed the employee retention tax credit (ERC) program to provide support to small businesses during the COVID-19 pandemic. This credit is worth thousands per employee. When the IRS provided the tax breaks, many companies wrongly claimed the credit.

Hence, the IRS came up with the ?special withdrawal process? for businesses that have pending claims in September. However, the ?voluntary disclosure program? allows those applicant businesses to repay the credits they received earlier. They will also get a 20% discount to cover third-party promoter fees.

But Danny Werfel, the Commissioner of the IRS, said that it is a ?limited time offer? on Thursday during a press call. Werfel also stated ?

?We urge employee retention credit recipients who think they were misled by promoters to review these special programs, including either the disclosure program or the withdrawal option, depending on their situation.?
(source)

Almost two weeks ago, the IRS also announced that it is sending more than 20K ERC rejection letters to taxpayers. They said that this action was a part of the crackdown on the businesses that filed dubiously. Werfel also said that the IRS is sending more letters to companies that received the ERC in the wrong way. He said that those taxpayers would not become a part of the voluntary disclosure program.

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Soumava Goswami

Inspired by The Social Network, Soumava loves to find ways to make small businesses successful – he spends most of his time analyzing case studies of successful small businesses. With 5+ years of experience in flourishing with a small MarTech company, he knows countless tricks that work in favor of small businesses. His keen interest in finance is what fuels his passion for giving the best advice for small business operations. He loves to invest his time familiarizing himself with the latest business trends and brainstorming ways to apply them. From handling customer feedback to making the right business decisions, you’ll find all the answers with him!