The IRS has launched a new program allowing businesses that mistakenly claimed the Employee Retention Credit in 2021 to repay 85% of the funds without penalties, while also warning of ongoing efforts to address potential fraud and errors in ERC claims.
IRS Offers New Program to Help Businesses Repay Incorrect Employee Retention Credit Claims Without Penalties
According to RSM, on August 15, 2024, the IRS shared details about a new program to help businesses that wrongly claimed the Employee Retention Credit (ERC) in 2021. This program lets companies pay back 85% of the money they receive, without having to pay extra penalties or interest. It’s part of the IRS’s effort to fix mistakes and stop false ERC claims, giving businesses a way to correct their errors without heavy fines.
This program is for businesses that got ERC refunds or credits for 2021 but later found out they didn’t qualify. To join, businesses need to apply by November 22, 2024. The IRS is also working on processing other Employee Retention Credit claims, including 50,000 claims that are considered low-risk and are close to being paid. At the same time, the IRS is taking steps to recover money from incorrect claims by sending letters to businesses and disallowing unpaid claims.
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$85 Billion Employee Retention Credit: IRS Unveils Voluntary Disclosure Program to Correct Errors and Combat Fraud (PHOTO: Forbes)
IRS Warns of New Employee Retention Credit Fraud Indicators and Urges Businesses to Review Their Claims
The IRS has also warned businesses about new signs of potential Employee Retention Credit fraud. These include businesses that stayed open without problems during the pandemic but still claimed the credit, and those that incorrectly counted wages used for PPP loan forgiveness as Employee Retention Credit wages. The IRS is asking businesses to check their claims and think about using the new program or other ways to fix their claims if they believe there might be mistakes.
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