The IRS is offering churches a second chance to voluntarily disclose and correct COVID-era Employee Retention Credit (ERC) errors.
In a pair of releases issued in August (IR-2024-212 and IR-2024-213), the IRS announced the reopening of the Voluntary Disclosure Program (VDP) through November 22, 2024.
The agency is urging any businesses—including churches—that claimed the ERC to review and self-correct claims at a 15-percent discount. Doing so will avoid future audits, penalties, and interest.
The reopening follows an initial VDP for pending claims that expired in March. VDP offers organizations a chance to self-correct and repay any credits received as a result of erroneous claims. In many cases, erroneous claims are rooted in aggressive marketing schemes hatched by unscrupulous third parties.
IRS going after incorrect claims
The IRS is in the middle of trying to reverse or recapture more than $1 billion in improper ERC claims.
More than 30,000 compliance letters have gone out, with thousands more going out later in the year.
Upgrade to an Advantage Membership today and begin receiving 20% off all Church Law and Tax store products!
“The limited reopening of the Voluntary Disclosure Program provides an opportunity for those with improper claims to come in ahead of IRS compliance work and get a discount on repayments,” said IRS Commissioner Danny Werfel. “This is especially important given increasing IRS compliance actions involving bad claims, many of them are the result of aggressive marketing tactics to lure unsuspecting businesses into claiming the complex credit. This provides a final window of opportunity for those misled businesses to make adjustments and avoid future compliance action by the IRS.”
The IRS is offering reduced and interest-free repayments under certain conditions, among other perks.
Who can apply
Businesses, tax-exempt organizations, and even government entities are eligible for the program. The program covers each tax period in 2021 that meets each one of the following requirements:
Your ERC claimed on a 2021 employment tax return has been processed and paid as a refund, which you have cashed or deposited, or paid in the form of a credit applied to the tax period or another tax period.
You now think that you were entitled to $0 in ERC.
You’re not under employment tax examination (audit) by the IRS.
You’re not under criminal investigation by the IRS.
The IRS has not reversed or notified you of intent to reverse all or part of your ERC. For example, you received a letter or notice from the IRS disallowing your ERC.
Other conditions apply. Click here to learn more. Meanwhile, an IRS FAQ page offers answers to common questions, such as how to enter the second VDP.
