IRS Reopens ERC Voluntary Disclosure Program While Warning of “Intensifying Audits”

The Internal Revenue Service (IRS) recently announced that it is reopening the Employee Retention Credit (ERC) Voluntary Disclosure Program through November 22, 2024. But, in its announcement, the IRS also warns of “intensifying audits” targeting ERC fraud, and it makes clear that submitting a voluntary disclosure application does not guarantee protection against facing an audit or investigation. With this in mind, should you consider submitting a voluntary disclosure application? Learn about some important considerations from Virginia tax attorney Kevin E. Thorn, Managing Partner of Thorn Law Group.

Should Virginia Business Owners File Under the Reopened ERC Voluntary Disclosure Program?

For Virginia business owners who are thinking about filing an application under the reopened ERC Voluntary Disclosure Program, there are some key limitations and risks to consider. These include (but are not limited to):

The IRS has Revised the Eligibility Criteria

The IRS has revised the eligibility criteria for submitting an application under the reopened ERC Voluntary Disclosure Program. Additionally, filing under the reopened ERC Voluntary Disclosure Program is only an option for businesses that need to correct ERC claims filed for the 2021 tax year. If your business is not eligible to file, or if you need to correct an ERC claim filed for the 2020 tax year, then submitting an application is not an option.

Acceptance is Not Guaranteed

Filing an application under the reopened ERC Voluntary Disclosure Program does not guarantee that the IRS will accept your application. If the IRS rejects your application for any reason, this will almost certainly lead to an ERC fraud audit or investigation.

Allegations of ERC Fraud Can Be Extremely Risky

Facing allegations of ERC fraud in an IRS audit or investigation can be extremely risky. In audits, businesses can face liability for back taxes, interest and penalties. In investigations, criminal tax fraud and tax evasion charges can be on the table—and these charges carry fines and prison time.

The IRS is “Intensifying Audits” Focused on ERC Fraud

While Virginia business owners should be careful not file under the reopened ERC Voluntary Disclosure Program if they are ineligible to do so, the alternative is not to sit idly by. As noted above, the IRS is “intensifying audits” focused on ERC fraud, and it is pursuing criminal investigations when warranted as well.

Other (and Better) Options May Be Available

If your business isn’t eligible to submit an application under the reopened ERC Voluntary Disclosure Program, what are the alternatives? The short answer is, “It depends.” There are different options in different circumstances, and the alternatives to submitting an application under the reopened ERC Voluntary Disclosure Program have their own limitations and risks as well. Thus, it will be important for you to work closely with an experienced Virginia tax attorney to ensure that you are making informed and strategic decisions.

Discuss Your Options with Virginia Tax Attorney Kevin E. Thorn

If you need to ensure that you are making informed and strategic decisions about avoiding IRS scrutiny for ERC fraud, we encourage you to contact us promptly. To schedule an appointment with Virginia tax attorney Kevin E. Thorn, Managing Partner of Thorn Law Group, please call 703-752-3752 or contact us confidentially online today.