The clock is ticking on voluntary ERC disclosures

The Internal Revenue Service is reminding tax professionals and employers that its second Employee Retention Credit Voluntary Disclosure Program ends Nov. 22.

The program, which helps businesses repay credits they received after filing ERC claims in error, allows businesses to correct improper payments at a 15% discount and avoid such compliance action as audits, full repayment, penalties and interest.

This second round of the program is open for tax periods in 2021. Employers can't use the second ERC VDP to disclose and repay ERC money from tax periods in 2020.

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The IRS continues to accept and process requests to withdraw a full ERC claim. Employers that haven't yet paid back an improperly claimed ERC can avoid compliance action by withdrawing their claim before they receive a refund. They can also withdraw their claim if they received a check but haven't deposited or cashed it.

The FAQs about the second disclosure program can help employers understand the terms of the program, including how much a business will have to pay in the second program and what happens if a business doesn't participate. The IRS's checklist can help businesses understand eligibility requirements.

Concerned employers who outsource payroll to a third party should have the latter file Form 15434, "Application for Employee Retention Credit Voluntary Disclosure Program."