Employers Have Until March 22 to Apply for ERC Disclosure Program

The deadline to apply for the IRS’s Voluntary Disclosure Program is March 22. The program allows businesses that claimed the employee retention credit (ERC) and received questionable payments to disclose and avoid future IRS action against them.

Employers that already received the ERC but are not entitled to it can apply if:

1. The employer is not under criminal investigation and has not been notified that it is under criminal investigation;
2. The IRS has not received information from a third party that the employer is not in compliance or has not acquired information directly related to noncompliance from an enforcement action;
3. The employer is not under an IRS employment tax examination for the tax period for which it is applying to the program; and
4. The employer has not received an IRS notice and demand for repayment of part or all of the ERC

Program Advantages

Employers using the program can repay only 80% of the ERC funds received and not pay interest on the ERC funds received. They will also not need to amend previously filed income tax returns. The IRS will not charge penalties or interest on the ERC amount if it is repaid in full when the signed closing agreement is submitted to the IRS.

How to Apply

To apply, the employer must first file Form 15434, Application for Employee Retention Credit (ERC) Voluntary Disclosure Program, which is a smart form that must be submitted using the IRS Document Upload Tool. Employers that outsourced their payroll obligations to a third party that reports, collects, and pays employment taxes on their behalf must have the third party file Form 15434. For more, view the IRS webinar.

To learn more about federal and state laws, regulations, and information to keep your company's payroll operations in compliance, check out Payroll Source Plus!

Jyme Mariani, Esq., is Managing Editor of Payroll Currently and Senior Manager of Payroll Information Resources for PayrollOrg.